National Real Estate_5

A section in the rectangular survey system contains A) 160 acres per section. B) 640 acres per section. C) 36 townships. D) 160 government lots.

The answer is 640 acres per section. Each township contains 36 sections, and each section is 1 square mile, or 640 acres per section.

If a mortgage lender discriminates against a loan applicant on the basis of age, it violates what law? A) Equal Credit Opportunity Act (ECOA) B) Federal Housing Administration (FHA) C) Americans with Disability Act (ADA) D) U.S. Department of Veterans Affairs (VA)

The answer is Equal Credit Opportunity Act (ECOA). Age is a protected category only under the ECOA. ADA does not have laws in regard to the age of applicants because the issue is covered under ECOA and applies to FHA and VA loans.

The type of loan that will MOST likely have the lowest loan-to-value (LTV) ratio is A) a conventional loan. B) a U.S. Department of Veterans Affairs (VA) loan. C) a Federal Housing Administration (FHA) loan. D) a private mortgage insurance (PMI) loan.

The answer is a conventional loan. Conventional loans are viewed as the most secure loans because their LTV ratios are often the lowest. Buyers in conventional loans make larger down payments than borrowers in FHA, PMI, or VA loans. Usually with the larger down payment in a conventional loan, no additional insurance or guarantee on the loan is necessary to protect the lender's interest.

An example of specific performance for breaching a real property purchase contract would be A) recovery of money lost as a result of the breach. B) the forfeiture of the earnest money deposit. C) a court action to force compliance with the contract. D) damages for the taking of private land for public use.

The answer is a court action to force compliance with the contract. Specific performance means that if one breaks the promise, the other party has the legal right to sue in court to make the defaulting party perform.

A lender offers to take over the title of a property that is in foreclosure without going through the foreclosure process. This is called A) a deed in lieu of foreclosure. B) an assumption. C) a subordination agreement. D) a reconveyance deed.

The answer is a deed in lieu of foreclosure. A deed in lieu of foreclosure is an alternative to foreclosure and is carried out by mutual agreement between the lender and the borrower rather than by a lawsuit. A reconveyance deed is used by a trustee under a deed of trust to return title to the trustor. In an assumption, a buyer purchases a property by assuming the seller's debt and becoming personally obligated for the payment of the entire debt. A subordination agreement moves a first mortgage lien to a secondary position by mutual agreement of the two lenders.

All of these clauses in a loan agreement enable the lender to demand that the entire remaining debt be paid immediately EXCEPT A) a due-on-sale clause. B) a defeasance clause. C) an acceleration clause. D) an alienation clause.

The answer is a defeasance clause. A defeasance clause requires the lender to execute a satisfaction of the loan when the loan has been fully paid. A due-on-sale clause provides that when the property is sold, the lender may declare the entire debt due or permit the buyer to assume the loan. An alienation clause states that the lender may collect full payment on a loan if the property is conveyed to another party without the lender's consent. An acceleration clause permits the lender to declare the entire debt payable immediately if the borrower defaults on payments on the loan.

A homeowner negotiates a home equity loan of $20,000 to pay for a basement renovation. The balance on the original mortgage for the home is $165,000. The home equity loan creates A) no additional lien on the property. B) a senior lien to the original mortgage lien. C) a junior lien to the original mortgage lien. D) a new balance of $185,000 for the homeowner's original mortgage.

The answer is a junior lien to the original mortgage lien. With the new home equity loan, the original mortgage loan remains in first position with the equity line in second position or lower depending on the number of liens. The home equity loan is a separate loan contract, with its own balance and repayment schedule.

A woman has permission from her friend to hike on his property during the autumn months. Her friend has granted her A) a conditional use permit. B) a license. C) riparian rights. D) an easement by necessity.

The answer is a license. A license is a personal revocable right to use another's property with permission of the owner. The permission is personal, nontransferable, and can be revoked at any time. A conditional use permit is granted by a city or municipality to a property owner to allow a special nonconforming use of property in a residential district. Riparian rights give to owners of land along the course of a river, stream, or similar body of water the rights to use the water according to state or local laws. An easement by necessity is created by a court when an owner sells a parcel of land that has no access to a public way except over the seller's remaining land.

A home with a warranty that is required by the state and covers merchantability and habitability is MOST likely A) an older home with outdated systems. B) a home built in the last 15 years. C) a home in a covenant controlled community. D) a new home.

The answer is a new home. New home warranties cover merchantability and habitability of the property. Each state differs in the requirements and length of time, which is typically one to five years.

A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of A) a latent defect. B) a structural defect. C) a patent defect. D) an environmental defect.

The answer is a patent defect. A patent defect is easily visible when inspecting a property. A latent defect is a hidden defect that is not easily visible during an inspection, and may be known to a seller but not disclosed to an agent or buyer. A small crack at a window is usually not a structural defect in a property and does not indicate an environmental danger.

A listing contract is BEST described as A) a property management contract. B) a sales contract. C) a personal service contract. D) an escrow contract.

The answer is a personal service contract. A listing is a personal employment contract between brokers and their clients setting forth the broker's responsibilities in finding for the seller a ready, willing, and able buyer. A property management contract establishes the responsibilities of a broker in managing a principal's property. A sales contract is a contract between a buyer and a seller for purchase of a property. An escrow contract is an agreement between a buyer, a seller, and an escrow holder (such as a broker) defining the responsibilities of each.

A title search for a property under contract has revealed several outstanding liens against the property. Which of these liens has highest priority? A) A special assessment for the current year B) An outstanding first mortgage lien dated and recorded one year ago C) A property tax lien for the current year D) A judgment lien rendered and recorded last month

The answer is a property tax lien for the current year. Tax liens have priority over previously recorded liens and over a special assessment, which will also take priority over previously recorded liens. The priority of the other liens will be based on the dates they were recorded. Liens recorded first will have a first right to payment or priority.

The owner of a unit in a cooperative receives A) a proprietary lease to the unit. B) a right of first refusal. C) a tax bill for the individual unit. D) a fee-simple interest in the unit.

The answer is a proprietary lease to the unit. In a cooperative, each tenant-owner receives shares in the cooperative and a proprietary lease to the owner's unit for the life of the cooperative. Cooperative owners do not own real estate and do not have fee simple interest in their units. Cooperative owners pay their portion of taxes assessed on the cooperative. A right of first refusal refers to the right of a person to have the first opportunity to lease or purchase real property. Cooperative owners own their shares as personal property.

Which of these is a specific, involuntary lien? A) A real estate property tax lien B) An income tax lien C) A judgment lien D) An estate tax lien

The answer is a real estate property tax lien. A real estate property tax lien is always on a specific piece of real estate; it happens without permission of the property owner and so is involuntary. Income tax liens, estate tax liens, and judgment liens are general because they are levied against both personal and real property owned by a debtor but do not take priority over other liens.

To protect the buyer, many states require A) a broker's certification of property condition. B) a property survey. C) a seller's property condition disclosure. D) a buyer's independent property inspection.

The answer is a seller's property condition disclosure. Most states require that the seller truthfully complete a seller's property condition disclosure statement. Some states use mandated disclosure forms. While states do not require property inspections, buyers should secure their own independent property inspection to ensure that they know the actual condition of the property. A property survey determines the exact boundaries of a property but does not note the condition of the property.

A mechanic's lien would be properly classified as A) a specific lien. B) an equitable lien. C) a general lien. D) a voluntary lien.

The answer is a specific lien. A mechanic's lien is a specific lien because it affects a specific property and only that particular property. It is an involuntary lien placed on a property without the owner's consent. A general lien is the right of a creditor to have all of an owner's property, real and personal, sold to satisfy a debt. An equitable lien arises out of a written contract that shows the intention of the parties to charge a particular property as a security for a debt or obligation.

Three friends were concurrent owners of a parcel of real estate. One of the friends died, and his interest passed according to his will to become part of his estate. The deceased friend was A) a severalty owner. B) a tenant in common. C) a joint tenant. D) a tenant by the entirety.

The answer is a tenant in common. In a tenancy in common, the property of a deceased owner may pass to the heirs according to the will. If the deceased owner had been a joint tenant, the property would not have passed according to the will because in a joint tenancy, the property interests would have transferred directly to the other two friends (cotenants). The deceased owner was not a tenant by the entirety, a category reserved for married couples. Nor was the deceased owner a severalty owner because that form of ownership requires property to be held by only one person.

An ownership interest that is based on occupancy during a specified period is A) a cooperative. B) a leasehold. C) a condominium. D) a time-share.

The answer is a time-share. A real property interest with the right to use the facilities for a certain period is called a time-share. While a time-share may be sold as a leasehold or a freehold interest, time-share intervals are usually shorter intervals of time, typically weekly intervals. A leasehold interest occurs when a tenant leases a property from an owner but usually for an extended longer period of time (such as one year). A condominium owner holds a fee simple absolute ownership to the unit and owns the common elements as tenants in common with the other owners. In a cooperative, tenants own shares in a corporation, partnership, or trust that holds title to the building, with tenants having the right to occupy their own units but not having a deed.

Under an existing zoning ordinance, no signs that extend more than 3 feet above the highest point of a roof may be placed on any building. An owner wants to erect a 9-foot-high revolving sign on the roof of his store. In order to do this legally, the owner must get A) a special use permit. B) a deed to the air rights. C) a variance. D) a nonconforming use permit.

The answer is a variance. A variance permits a landowner to use the property in a manner that is strictly prohibited by the existing zoning. A nonconforming use permit would only apply to a use that existed before the zoning ordinances. A variance does not require ownership of air rights. Special use permits are tied to how the property is used (e.g., as a school or a day care).

A real estate licensee's responsibilities include A) including and paying for a home warranty program with all listings. B) purchasing a home warranty program on the seller's or the buyer's behalf. C) advising the seller or the buyer to purchase a home warranty program. D) avoiding the discussion of home warranty programs.

The answer is advising the seller or the buyer to purchase a home warranty program. A real estate can advise the seller or the buyer to purchase a home warranty program. A home warranty program can be an attractive selling point.

A mortgage in which a payment partially pays off both the principal and interest on the loan is A) a construction loan. B) an amortized loan. C) a reverse mortgage. D) an interest-only loan.

The answer is an amortized loan. The payment in an amortized loan partially pays off both principal and interest. An interest-only mortgage requires the payment of interest only for a stated period of time, with the principal balance due at the end of the loan or with the remaining principal balance and interest recalculated after the stated period. A reverse mortgage allows people 62 years or older to borrow money against the equity built in their home, and no payments are due until the property is sold or the borrower defaults, moves, or dies. A construction loan is generally short-term or interim financing in which the borrower pays interest only on the monies that have been disbursed in draws used to pay for construction.

The buyer has made an offer that the seller has accepted and proper notice has been given to the buyer of the seller's acceptance. The offer is now considered A) an assignment. B) an executory contract. C) an executed contract. D) a unilateral contract.

The answer is an executory contract. The period from when the contract is agreed to and signed by both parties until it is executed (closed) is called the executory period. Executed contracts have been closed. Unilateral contracts bind only one party, such as an option. Assignments transfer the contract duties but not liabilities.

The sales comparison approach to value is MOST important when estimating the value of A) an apartment building. B) an existing residence. C) a hotel. D) a retail location.

The answer is an existing residence. The sales comparison approach arrives at an estimate of value by comparing the existing residence with recently sold comparable properties. This approach is normally considered the most reliable in appraising single-family homes to the large number of current sales. To find an estimate of value for an apartment building, retail location, or hotel, an appraiser would normally rely on the income approach to value for each of these income-producing properties.

A real estate broker wants to end racial segregation. As an office policy, the broker requires that salespeople show prospective buyers from racial or ethnic minority groups only properties that are in certain areas of town where few members of those groups currently live. The broker has prepared a map illustrating the appropriate neighborhoods for each racial or ethnic group. Through this policy, the broker hopes to achieve racial balance in residential housing. Which statement is TRUE regarding this broker's policy? A) While the broker's policy may appear to constitute blockbusting, the broker's good intentions outweigh the law and as such is acceptable. B) This type of steering is allowed in cases where equality is the end result. C) Because the effect of the broker's policy is discriminatory, it constitutes illegal steering regardless of the broker's intentions. D) The broker's policy clearly shows the intent to discriminate.

The answer is because the effect of the broker's policy is discriminatory, it constitutes illegal steering, regardless of the broker's intentions. Violations of fair housing laws occur when the effects of a practice result in illegal discrimination, regardless of intentions. The broker's policy in this case has the effect of steering purchasers to particular neighborhoods and is illegal steering. Blockbusting would occur if the broker induced owners to sell their property by claiming that members of a protected class were buying in the area and lowering property values.

The property disclosure form is usually given to a buyer A) at the closing of the transaction. B) after an offer is made. C) at the initial contact with the buyer. D) before an offer is made.

The answer is before an offer is made. State laws may vary, but generally the property disclosure form is given to the buyer before an offer is made. The disclosure helps to ensure that a buyer is aware of any defects or problems with a property before making an offer.

Abandoned factories, former dry cleaning properties, and vacant gas stations that may contain environmental hazards are classified as A) brownfields. B) priority list sites. C) green fields. D) wetlands.

The answer is brownfields. A brownfield site is real property that is affected by the presence or potential presence of a hazardous substance. Brownfields that are not corrected may be prevented from redevelopment and can cause decreased property values in a neighborhood. Wetlands are land areas with significant groundwater at or near the surface that produces a wetland plant community. Wetlands are often subject to federal, state, or local conservation controls.

The mixing of trust funds with a broker's personal funds is A) permitted in offices with fewer than three agents. B) conversion. C) legal in most states. D) commingling.

The answer is commingling. Commingling, or mixing of funds, is illegal, regardless of the size of an office. Conversion occurs when brokers use escrow funds for their own use.

A broker would have the right to dictate which of these to an independent contractor? A) Sales meetings the person would need to attend B) Number of hours the person would have to work C) Work schedule the person would have to follow D) Compensation the person would receive

The answer is compensation the person would receive. Brokers may dictate the compensation their independent contractors will receive for work not yet done, but they may not dictate working schedules or sales meetings to be attended. The Internal Revenue Service (IRS) would most likely classify persons employed with defined work schedules, including the numbers of hours worked, and required sales meetings as employees rather than independent contractors for income tax purposes.

A developer experiences success and good profits in a recent real estate project. What principle of value indicates that her experience will attract others to engage in similar projects in the same area? A) Competition B) Conformity C) Anticipation D) Highest and best use

The answer is competition. Competition is the interaction of supply and demand, meaning that good profits tend to attract new activity and competition from other developers or investors. According to the principle of anticipation, a property's value is affected by the expectation that certain events will occur; for example, the value of a house may be negatively affected if rumors circulate that an adjacent property may be converted to commercial use in the near future. The principle of conformity means that the maximum value of a property is created when the property is in harmony with its neighborhood and surroundings. The highest and best use of a property is the use that will give the property its greatest current value.

The process by which the government can acquire ownership of private land for public use is A) condemnation. B) adverse possession. C) doctrine of prior appropriation. D) escheat.

The answer is condemnation. Condemnation is the process through the courts or administrative action by which a government acquires ownership of private land for public use. Eminent domain is the right of the government to acquire ownership, and condemnation is the process used to implement that right. Escheat is the taking of land by the government when the land is abandoned or when the owner dies without heirs capable of inheriting the land. The doctrine of prior appropriation is tied to how priority is set in water rights.

Carbon monoxide (CO) is NOT A) a result of incomplete combustion. B) a natural result of combustion. C) easy to detect by smell. D) quickly absorbed in the body.

The answer is easy to detect by smell. CO is difficult for the human nose to detect because it is odorless and colorless. Many states now require that CO detectors be installed in residential property. CO is a natural result of incomplete combustion when burning wood, oil, or natural gas. CO can be quickly absorbed by the body, causing lack of oxygen and resulting in dizziness, nausea, and even death.

Capitalization is a mathematical process by which annual net operating income (NOI) is used to A) determine replacement cost B) establish effective gross income (EGI) C) establish depreciation D) estimate present value

The answer is estimate present value. Capitalization converts the NOI into an indication of value in the income approach to determine the current or present market value. An appraiser estimates the return on investment an investor would demand for the property being appraised. An appraiser will determine replacement costs, reproduction costs, and depreciation for a property when using the cost approach to value. The EGI is estimated by deducting an appropriate amount for vacancy and rent loss in an income-producing property.

A lease must give the tenant A) the personal address of the owner. B) exclusive possession of the property. C) the location of the owner's business account. D) 30 days to make the first rent payment.

The answer is exclusive possession of the property. A lease gives the tenant possession of the property. Other items may be included in the lease but are not a requirement.

A contract that has NOT yet been fully performed is A) voidable. B) unenforceable. C) executory. D) executed.

The answer is executory. The phase from offer to a closed and executed/closed contract is called the executory period. Voidable contracts are binding on one party and not the other. An unenforceable contract is also void due to lack of an essential element.

A property owner conveys a life estate to her uncle and names her son as remainderman. On the death of the uncle, the son will have what type of estate? A) Remainder estate B) Reversionary estate C) Qualified fee estate D) Fee simple absolute estate

The answer is fee simple absolute estate. The son holds a remainder interest in the property and will have a fee simple absolute estate upon the death of the uncle, the life tenant. A qualified fee estate is limited by specific deed conditions created by the deed. A reversionary interest exists when a life estate will revert to the original owner at the death of the life estate owner or some other person. The son as the remainderman holds a remainder interest during the uncle's life.

While looking at a property, the potential buyers ask their salesperson if a fence is the boundary line of the property. The salesperson should recommend that the buyers A) ask the neighbors. B) read the legal description. C) ask the owners of the property. D) have a survey conducted.

The answer is have a survey conducted. To determine the exact boundaries of a property, a survey is recommended. Some lenders require a survey to confirm the legal description of the property. The owners and the neighbors may not know the exact boundaries of the property.

Homeowners may deduct all of these expenses when preparing their income tax return EXCEPT A) some origination fees. B) real estate taxes. C) homeowners association dues. D) mortgage interest.

The answer is homeowners association dues. Homeowners may not deduct homeowners association dues from annual tax returns. Points for loans, some origination fees, mortgage interest, and real estate property taxes can be deducted on income tax returns (remember POIT).

A buyer and a seller agree on a purchase price of $200,000 for a house. The contract contains a clause stating that "time is of the essence." Which statement is TRUE? A) If the closing date passes and no closing takes place, the party who failed to close is considered to be in default. B) The closing date must be stated as a particular calendar date and not simply as a formula, such as "two weeks after loan approval." C) The closing must take place within a reasonable period before the stated date. D) A "time is of the essence" clause is not binding on either party.

The answer is if the closing date passes and no closing takes place, the party who failed to close is considered to in default. The nondefaulting party may have remedies to retain the earnest money (liquidated damages) or to sue the defaulting party to perform the contract terms (specific performance).

A couple bought a retail building and took title as joint tenants. One woman died testate. The other woman now owns the store A) in severalty. B) as a tenant in common with the dead woman's heirs. C) in trust. D) as a joint tenant with rights of survivorship.

The answer is in severalty. Joint tenancy includes the right to survivorship; upon death of a joint tenant, the ownership interest of that joint tenant passes to the remaining co-owner(s). In this case, the women took title as joint tenants, meaning that upon one's death, there is only one owner who now owns the property in severalty. In a tenancy in common, the owners own an undivided fractional interest in the property and that interest is passed on according to the owner's will, to heirs, or to a trust.

A smaller home is surrounded by larger, more expensive homes. The value of the smaller home will MOST likely A) be anticipated to increase for the first five years. B) not be affected by surrounding properties. C) decrease because of the larger surrounding properties. D) increase because of the larger, more expensive properties.

The answer is increase because of the larger, more expensive properties. Under the principle of conformity, progression shows that the value of a modest, less expensive home will increase if it is located among larger, fancier, more expensive properties. Under regression, a structure that is larger or more luxurious would tend to be valued in the same range as less lavish homes in a neighborhood of modest homes.

In the purchase agreement, the buyer and the seller agreed to liquidated damages as a remedy for default. If the buyer defaults, this means that the seller A) sues the buyer to buy the property. B) sues the buyer and keeps the earnest money. C) needs to notify the buyer of the intent to sue for liquidated damages. D) keeps only the buyer's earnest money.

The answer is keeps only the buyer's earnest money. Liquidated damages as a remedy allows the seller to keep the earnest money and nothing more. Specific performance is a lawsuit to have the buyer perform the terms of the contract.

A property owner executes a deed to a purchaser, has it acknowledged, and receives payment from the purchaser. However, the owner holds the deed and arranges to meet the purchaser the next morning at the courthouse to present the deed to the purchaser. At this point, A) the purchaser owns the property because he has paid for it. B) legal property will not pass to the purchaser until he has received the deed from the owner and recorded it in the public record. C) legal title to the property will not pass to the purchaser until the owner gives the deed to him the next morning. D) the purchaser will own the property when he signs the deed the next morning.

The answer is legal title to the property will not pass to the purchaser until the owner gives the deed to him the next morning. A title is not considered transferred until the deed is actually delivered to and accepted by the grantee. Title is said to pass only when a deed is delivered and accepted, and the effective date of the transfer is the date of delivery of the deed itself. The deed must be recorded in the county in which the land is located in order for the purchaser's interest in the property to be protected.

The National Flood Insurance Reform Act of 1994 imposes certain mandatory obligations on A) licensees. B) borrowers. C) sellers. D) lenders.

The answer is lenders. This means that if a lender discovers that a property is in a flood zone area, the lender must notify the borrower.

A promissory note A) may not be executed in connection with a real estate loan. B) makes the borrower personally liable for the debt. C) is an agreement to perform or not to perform certain acts. D) is a guarantee by a government agency.

The answer is makes the borrower personally liable for the debt. A promissory note is the borrower's personal promise to repay a debt according to agreed-on terms. A promissory note is a contract, an agreement to perform a certain act. A borrower of real estate securing a mortgage loan will sign a promissory note agreeing to repay the loan.

A firm's broker associate and a salesperson have been found guilty of violating the state real estate license law and have had their real estate licenses revoked. In this case, the principal broker A) should not be concerned because broker associates do not need to be supervised. B) might have to make a claim against his errors and omissions (E & O) insurance. C) would most likely have to pay a civil fine in addition to having his license revoked. D) may be found guilty of improper supervision.

The answer is may be found guilty of improper supervision. A principal broker is responsible for supervising all licensees in the firm. E & O insurance would not cover this type of issue. Civil fines are created in civil court not through a hearing at a real estate commission.

All of these are true about radon EXCEPT A) radon levels will vary in certain weather conditions. B) modern home construction reduces the potential for radon gas accumulation. C) radon levels can be reduced by installing ventilation systems. D) it is colorless, odorless, and tasteless.

The answer is modern home construction reduces the potential for radon gas accumulation. Radon is a colorless, odorless, and tasteless radioactive gas. The risk of radon increases as it builds up in an enclosed space because of inadequate ventilation. Modern, energy-efficient homes and buildings with practically airtight walls and windows may increase the potential for radon gas accumulation. Once radon accumulates in a basement or crawlspace, efficient heating and ventilation systems can rapidly spread the gas throughout the building. Rain, colder weather, and high winds can cause an increase in the accumulation of radon within a structure. Radon is mitigated by ventilating outside the home.

A couple declined to purchase an owner's title policy at closing, but the lender required them to purchase a mortgagee's title policy. Six months after the closing, a man knocked on their door. He explained that he had an ownership interest in the property because his spouse sold the property while he was in another country. The man at the closing table, who said he was the spouse, was not. If the man's claim is true, are the buyers covered under the lender's policy? A) Yes, because the closing took place only six months ago. B) No, because the buyers are not covered by the mortgagee's policy. C) No, because the owner's policy does not protect against forgery. D) Yes, because the mortgagee's policy protects the buyer against forgery.

The answer is no, because the buyers are not covered by the mortgagee's policy. The couple decided not to purchase an owner's title policy, which would have covered them in this situation. The mortgagee's or lender's title policy protects only the lender against the forgery.

The unfinished area of a single-family home is that area A) not suitable for year-round use. B) wholly or partially below grade. C) suitable for year-round use. D) entirely above grade or ground level.

The answer is not suitable for year-round use. An area suitable for year-round use is considered a finished area. The area of the house that is entirely above grade or ground level is above grade. The area of a house that is wholly or partially below grade is below grade.

Which of these is NOT a form of co-ownership? A) Ownership in severalty B) Community property C) Tenancy in common D) Tenancy by the entirety

The answer is ownership in severalty. Ownership in severalty occurs when a property is owned by one individual or corporation. In a tenancy in common, each cotenant owns an undivided fractional interest in a property. Tenancy by the entirety is a form of joint ownership by a married couple that allows the surviving spouse to acquire full ownership of the property upon the death of one of the spouses. Community property consists of personal and real property acquired by either spouse in a marriage and belonging to both parties to the marriage.

Rent is usually A) paid in arrears. B) prorated at closing between the tenant and the owner. C) prorated at closing between the lessor and lessee. D) paid in advance.

The answer is paid in advance. Rent is paid in advance by the tenant. Rent will always be prorated between the seller and the new buyer, with the seller owing the buyer for the portion of the month the buyer owns the property but does not have possession, which belongs to the tenant who paid rent.

Property managers may not commingle funds. This means that property managers should A) place a security deposit check into the management's trust account. B) pay a vendor from the company rental account. C) pay themselves from the company's operations account. D) place a security deposit check into the owner's business account.

The answer is place a security deposit check into the management's trust account. All security deposits should be placed in trust accounts. Property managers typically use the rental account to pay property bills, including the management commission, which are then moved to the management operations account. Property managers may only be paid from the operations account, never the trust account. A security deposit check would never be placed in an owner's business account.

To create joint tenancy in the ownership of real estate, there must be unities of A) title, interest, encumbrance, and survivorship. B) grantees, ownership, claim of right, and possession. C) ownership, possession, heirs, and title. D) possession, interest, time, and title.

The answer is possession, interest, time, and title. The equal interests of possession, interest, and title must all occur at the same time (PITT) for joint tenancy to be created.

At last week's homeowners association meeting, the board voted to install new windows in the coming months. As a result of this improvement, the association dues will be increased by $100 per month. This increase will become effective the following year. In this case, if a homeowner decides to sell in the interim, which of these BEST applies? A) It is not the seller's responsibility to disclose changes. B) Disclosure is not required because the increase will not go immediately into effect. C) Proposed changes should always trigger disclosure. D) Disclosures of this type should be handled by the attorneys.

The answer is proposed changes should always trigger disclosure. Any change that will impact a future owner should be disclosed to a prospective buyer. Providing the buyer with a copy of the homeowners association bylaws would be a way to provide disclosure of any future changes or increases that will affect owners.

The Uniform Environmental Covenants Act (UECA) A) prevents the rebuilding of brownfields. B) never restricts land use. C) provides for the cleanup of contaminated land. D) provides for the rehabilitation of brownfields.

The answer is provides for the rehabilitation of brownfields. The UECA requires an environmental covenant that indicates the cleanup of hazardous material and restrict land use.

When showing a property, an agent exaggerates the property's benefits. This practice is A) puffing, which is legal as long as there is no misrepresentation. B) an illegal misrepresentation of the property. C) fraud on the part of the agent. D) an illegal ministerial act.

The answer is puffing, which is legal as long as there is no misrepresentation. The broker is exaggerating the benefits of the property. In this situation, the broker is not guilty of fraud or misrepresentation. Fraud is a deceitful practice or a misstatement of a material fact, known to be false. A ministerial act is a routine act performed for a customer that does not involve judgment, discretion, or advice.

If there is a low vacancy rate, the property manager should probably A) raise the rent. B) offer rebates. C) offer free rent. D) lower the rent.

The answer is raise the rent. Low vacancy rates means that there is a high demand for rentals. The principal of supply and demand states when there is not enough supply and there is high demand, value and rent rise. If demand lowers and supply increases, the rents would go down.

Which tax targets homeowners in particular? A) Personal property tax B) Sales tax C) Real property tax D) Luxury tax

The answer is real property tax. A real property tax (ad valorem tax) taxes homeowners on the value of their real estate. A sales tax is a tax on the price of an item purchased. A personal property tax (such as the tax on a boat) is a tax levied by a government entity on personal property. A luxury tax is a tax levied on expensive, luxury items other than real estate.

After real estate has been sold by the state or the county to satisfy a delinquent property tax lien, if state law permits, the defaulted owner has a right to A) redeem the property within the time specified by the law. B) record a notice of nonresponsibility for the unpaid taxes. C) pay the creditors directly and have their liens removed. D) have the sale canceled by paying the back taxes and penalties

The answer is redeem the property within the time specified by the law. Generally, a delinquent taxpayer can redeem the property before the tax sale by paying the delinquent taxes plus interest and charges (court costs and attorney fees). This right is known as the equitable right of redemption. After the real estate has been sold, the defaulted owner may redeem the property by paying the amount collected at the tax sale plus interest, charges, and any taxes levied since the sale. This right is known as the statutory right of redemption. These terms are also used in the foreclosure process with mortgages or deeds of trust.

A homeowner constructs an eight-bedroom brick house with a tennis court, a greenhouse, and an indoor pool in a neighborhood of modest two-bedroom and three-bedroom frame houses on narrow lots. The value of this house is MOST likely to be affected by what principle? A) Regression B) Contribution C) Progression D) Substitution

The answer is regression. Larger lavish homes in a modest neighborhood will be drawn down in value by the modest, less lavish homes. Regression is the opposite of progression. Under progression, the value of a modest home would be higher if it were located among larger, fancier homes. The principle of substitution states that value is determined by what the buyer can find to buy that is similar or equal to the property under consideration. The principle of contribution is used to determine the value of adding improvement to the property.

A hurricane destroyed several apartment buildings in a community, creating an imbalance between the supply and demand of rental units. If the local government imposes a law that restricts the amount of rent a landlord may charge, it is known as A) gross rent. B) fixed rent. C) rent control. D) rent restriction.

The answer is rent control. Rent control is by definition government restriction on the amount a property owner may charge. Rent restrictions are tied to property requirements, such as every building having a certain number of low-income residents. A gross or fixed lease is when the tenant pays only rent.

Zoning ordinances normally define specific uses for land that are permitted within a municipality. All of these are land uses traditionally classified in such ordinances EXCEPT A) commercial. B) industrial. C) rental. D) residential.

The answer is rental. Zoning ordinances have traditionally classified land use into residential, commercial, industrial, and agricultural and do not include rental as one of the classifications. Rental refers to a type of property use and ownership, a leasehold, rather than a usage of the land.

Licensees engaged in the management field are A) not required to be familiar with lead-reduction procedures. B) required to perform lead-based paint abatement procedures. C) not required to provide tenants with lead-based paint disclosure. D) required to become familiar with lead-reduction procedures.

The answer is required to become familiar with lead-reduction procedures. Real estate licensees engaged in the property management field must be knowledgeable in a large variety of issues, including lead-reduction procedures. Real estate licensees do not perform abatement procedures; however, they must become familiar with laws that regulate lead-based paint.

A broker is hired as a buyer's agent. The buyer confides that he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the broker's responsibility regarding disclosure of the bankruptcy when presenting the offer to purchase is that the broker is A) required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer. B) not required to disclose the bankruptcy because the broker has no agency relationship with the seller. C) required to disclose the bankruptcy under Equal Credit Opportunity Act (ECOA). D) not required to disclose the bankruptcy because the seller might reject the offer.

The answer is required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer. The broker is obligated to disclose any material fact—something that might make the parties to the transaction change their mind, regardless of the agency or nonagency relationship the broker has with the seller. The ECOA is a federal law prohibiting discrimination in the granting of credit and does not regulate disclosures required by in a real estate transaction.

A borrower defaulted on a loan and the lender foreclosed. The lender obtained the property, which sold for less than what the borrower owed. In this case, the lender may A) seek a deficiency judgment, which can be used to collect the balance owed. B) do nothing because the property has gone through foreclosure. C) start a new foreclosure suit to collect the balance due from the borrower. D) file for a default judgment and attach all the borrower's real and personal property.

The answer is seek a deficiency judgment, which can be used to collect the balance owed. After the buyer defaulted and the loan has been foreclosed, lenders may seek deficiency judgments.

An option to purchase binds which of these parties? A) Buyer only B) Seller only C) Both buyer and seller D) Neither buyer nor seller

The answer is seller only. An option contract is a unilateral contract in which the seller agrees to sell the property at a set price in the future if the buyer decides to buy.

An option to purchase binds which of these parties? A) Seller only B) Both buyer and seller C) Neither buyer nor seller D) Buyer only

The answer is seller only. In an option, the seller has agreed to not sell the property to anyone else and to give the buyer the right to sell during the option period. The potential buyer (optionee) who purchases an option to purchase is not bound to purchase the property. However, should the buyer decide to exercise the option, the seller is bound to proceed with the sale in keeping with all the details contained in the option. Once the option is accepted, the buyer and the seller move forward with a bilateral purchase contract.

All of these are true of the government's police power EXCEPT A) it is used to ensure the health, safety, and welfare of the community. B) set private controls in certain subdivisions on the types of floor plans, fencing, and house colors. C) set land use policy to demonstrate the authority of the state. D) take private land if the public will benefit from the taking.

The answer is set private controls in certain subdivisions on the types of floor plans, fencing, and house colors. The government's right of police power is used to ensure health, safety, and welfare within a community, along with setting land use policy and the right to take private land for public use or benefit. Government rights do not include the private right to control issues within only certain neighborhoods; these are known as deed restrictions and are usually set by the original developer.

The typical relationship between a listing broker and a seller represents what type of agency? A) Universal B) Special C) Implied D) General

The answer is special. The broker serves the client—either a buyer or a seller—usually by performing the specific brokerage acts spelled out in the employment contract (listing or buyer brokerage agreement). Specific assignments create a special agency. In a general agency relationship, the agent is authorized by a principal to perform any and all acts associated with a particular job or business. Implied agency arises out of the words or conduct of the parties. A universal agent is a person empowered to do anything that a principal could do personally and is a general agent.

A buyer signed a purchase agreement, but then the seller decided not to sell. The buyer sued the seller successfully and was able to purchase the house. What was the contract remedy if the seller was in default? A) Liquidated damages B) Mutual agreement C) Specific performance D) Unilateral rescission

The answer is specific performance. The buyer does not have the option of liquidated damages because the seller has not brought any earnest money to the contract. Mutual agreement is when the parties terminate and return all items of value to each party as if the contract did not exist. Unilateral rescission is one party terminating.

The act of directing homeseekers toward or away from particular areas either to maintain or to change the character of the neighborhood is A) redlining. B) steering. C) blockbusting. D) legal.

The answer is steering. A person who guides prospects either toward or away from certain neighborhoods based on racial, ethnic, religious, or similar concerns is guilty of steering. This practice is outlawed by the federal Fair Housing Act of 1968 and is not legal. Whether it is done to promote housing segregation or integration is immaterial. Redlining is the illegal practice of refusing to make a mortgage loan or restricting the number of loans in a particular area. Blockbusting is inducing panic selling by claiming that the entry of a protected class will have some sort of negative impact on property values.

In which type of mortgage would the mortgagor pay no principal on the loan until the end of the term? A) Fully amortized loan B) Straight loan C) Partially amortized loan D) Contract for deed

The answer is straight loan. The straight/term/interest-only loan requires payments of interest only. All other loans require some form of principal payment.

In which type of loan are interest-only payments made with a lump-sum balloon payment at the end? A) Federal Housing Administration (FHA) B) Amortized C) Straight D) Adjustable-rate mortgage (ARM)

The answer is straight. In a straight/term or interest-only loan, the borrower makes payments of interest only. At the end of the loan term, the entire original principal debt must be paid in one lump sum balloon payment. An amortized loan requires equal periodic payments on both the principal and the interest. An ARM has an interest rate that fluctuates up or down during the loan term based on some economic indicator. FHA loans tend to be fully amortized loans, which are fully paid at the end of the term.

An appraiser conducting an appraisal of a single-family residence notes that the subject home does not have an attached garage. Three of the comparables the appraiser chooses include attached, finished garages. To account for the garage that is present in each comparable, but not in the subject property, the appraiser will A) add the value of an attached garage to the sales price for each comparable. B) subtract the value of an attached garage from the sales price for each comparable. C) subtract the value of an attached garage from the subject property. D) add the value of an attached garage to the subject property.

The answer is subtract the value of an attached garage from the sales price for each comparable. Adjustments are made only to comparable properties never the subject. If the comparable is better than the subject or has a feature that is present in a comparable but not in the subject, the value of the amenity is subtracted from the sales price of the comparable. If the subject is better than, the value of the amenity is added.

In receiving a gift of a parcel of real estate, one of the two new owners was given an undivided 60% share, and the other received an undivided 40% share. They now hold title as A) tenants in common. B) community property owners. C) joint tenants. D) cooperative owners.

The answer is tenants in common. Tenants in common hold property with undivided fractional interests, and the shares do not have to be equal. In a joint tenancy, each owner holds equal shares and interests to the property. Community property consists of personal or real property acquired by either party in a marriage and belonging to both parties to the marriage. In a cooperative, owners own shares in a corporation, partnership, or trust, which owns a property, with each owner holding a proprietary lease and the right to occupy the unit.

The buyer has made an offer to the seller, who has countered and given the buyer 24 hours to accept the counter. In this case, the original offer is considered A) voidable. B) void. C) terminated. D) executory.

The answer is terminated. A counteroffer terminates the original offer and creates a new offer. Because there is no contract, the terms are executory. An offer is not a contract and cannot be considered voidable or void.

When a seller takes back a purchase money mortgage from a buyer, A) the terms and conditions of the mortgage must be set forth in writing. B) the terms and conditions of the mortgage are included in the borrower's first mortgage. C) the seller and the buyer may enter into an enforceable oral agreement. D) the seller agrees to collect the buyer's payments directly from the lender.

The answer is terms and conditions of the mortgage must be set forth in writing. In order for the purchase money mortgage to be enforceable, the terms and conditions, such as principal and interest, must be set forth in detail in writing. The mortgage contract is made directly between the buyer and the seller. An oral agreement is not enforceable. The buyer makes payments directly to the seller.

During a job interview, a principal broker tells a salesperson that she will work for the brokerage firm as an independent contractor. As an independent contractor, what can the salesperson expect from her work with the broker? A) At least 90% of her income will be based on sales production. B) She will be required to work a minimum of 40 hours per week. C) She may participate in the firm's health insurance plan. D) She must attend weekly sales meetings.

The answer is that at least 90% of her income will be based on sales production. To be considered an independent contractor under Internal Revenue Service (IRS) rules, at least 90% of the salesperson's income must be based on sales production. A broker may not require a minimum number of weekly hours or mandate sales meetings for independent contractors but may make such requirements for employees of the firm.

A property owner conveys a life estate to his brother for the brother's lifetime and designates his cousin as the person to whom the property will pass when the life estate ends. When the brother dies, what happens to the property? A) The property reverts to the original property owner. B) The cousin automatically becomes the fee simple owner of the property. C) The property passes to the brother's heirs. D) The property owner must designate a remainderman for the property.

The answer is the cousin automatically becomes the fee simple owner of the property. The property owner named his cousin as the remainderman, the one to whom the property would pass upon the death of his brother. On his brother's death, the life estate ends, and the property automatically passes to the cousin. If the property owner does not choose a remainderman when conveying the life estate to his brother, ownership reverts to the original property owner or to his heirs (or other individuals specified in the property owner's will).

Owners' equity in their residence is A) the amount paid each month for the use of the lender's money. B) the purchase price of the residence minus current mortgage liens. C) the balance remaining on the mortgage loan. D) the difference between the current value of the property and any mortgage liens on the property.

The answer is the difference between the current value of the property and any liens on the property. An owner's equity is the amount of money remaining once current liens, including the mortgage, are subtracted from the current market value of the property. The amount paid each month for the use of the lender's money is the interest paid for that month. The purchase price of the residence is the original amount paid for the property and may have changed. Equity = value today - debt today.

A landowner sells one acre of his two-acre property to a friend. He reserves for himself an appurtenant easement over the friend's land for ingress and egress. The landowner's property is A) is subject to an easement in gross. B) the dominant tenement. C) the servient tenement. D) cleared of the easement when the landowner sells the remaining acre to a third party.

The answer is the dominant tenement. The landowner's parcel benefits from the easement and is the dominant tenement. The neighbor's tract, over which the easement runs, is the servient tenement. The landowner's easement remains with the property when it is sold. An easement in gross is a company's right to use another's property, such as an easement for a utility company to run power lines over another's property.

The buyer has been informed in the title work that there is an easement on the property he has under contract. At closing, what will happen with the easement? A) If the buyer's attorney sends a lis pendens with a notice of revocation, the easement will terminate upon transfer of the title. B) The easement will transfer with the title, with the buyer's only choice being to terminate the purchase contract if the easement is an issue. C) The buyer needs to send the seller notice to terminate the easement before closing in order to have it removed. D) The easement will transfer with the deed but can be revoked once the buyer is in title.

The answer is the easement will transfer with the title with the buyer's only choice being to terminate the purchase contract if the easement is an issue. Easements are nonrevocable rights, so the seller or buyer cannot terminate or revoke the easement. The buyer's only choice is to take the property with the easement or terminate the purchase contract.

When dimensions are stated as 75 × 125, the first measurement given refers to A) the setback footage. B) the foot frontage. C) the foot side. D) the building dimensions.

The answer is the foot frontage. Foot frontage is the first measure that appears in a lot size. For example, a measurement of 75 ft. × 125 ft. indicates that 75 ft. is the front footage.

An apartment rule prohibits pets. A prospective tenant with a physical disability relies on a service animal to assist him. Which of these is TRUE? A) The landlord may not refuse to rent to a person with a service animal. B) The landlord can require proof of the tenant's disability and require a nonrefundable pet deposit. C) The landlord can waive the enforcement of the rule only if there is a suitable unit in the complex for an animal. D) The landlord must allow the animal but can charge an extra pet deposit.

The answer is the landlord may not refuse to rent to a person with a service animal. Service animals are not pets and must be allowed as a reasonable accommodation for a disabled person under the Fair Housing Act. The landlord may not charge any pet deposit for the animal.

The term depreciation refers to A) the capitalized value of lost rental income. B) the value of real estate after the expiration of its useful life. C) the costs incurred to renovate or modernize a building. D) the loss of value in real estate from any cause.

The answer is the loss of value in real estate from any cause. The term depreciation refers to the loss of value in real estate from any cause either on the property or off the property, or a combination of the two.

A single man with two small children has been told by a real estate salesperson that homes for sale in a condominium complex are available only to married couples with no children. Which statement is TRUE? A) Restrictive covenants in a condominium take precedence over the fair housing laws. B) Condominium complexes are exempt from the fair housing laws and can therefore restrict children. C) Because a single-parent family can be disruptive, if the parent provides little supervision of the children, the condominium is permitted to discriminate. D) The man may file a complaint alleging discrimination on the basis of familial status.

The answer is the man may file a complaint alleging discrimination on the basis of familial status. The salesperson, and by implication the broker, and the property owner-principals have violated the prohibition against familial status discrimination. Anyone in charge of one or more children under age 18 who is denied access because of the children is the victim of discrimination based on familial status. Restrictive covenants do not take precedence over fair housing laws.

The lender who provides a real estate loan to a borrower is known as A) the mortgagee. B) the optionor. C) the mortgagor. D) the optionee.

The answer is the mortgagee. The lender is the mortgagee. The borrower who receives a loan and in return gives a note and mortgage to the lender is the mortgagor. An optionor is an owner who gives an optionee, a prospective purchaser or lessee, the right to buy or lease the owner's property at a fixed price within a certain period of time.

A deed of trust differs from a mortgage in A) the redemption rights allowed after foreclosure. B) the number of parties involved in the loan. C) the time period permitted to cure a default. D) the obligation of the borrower to repay the funds.

The answer is the number of parties involved in the loan. A deed of trust is a three-party instrument that conveys naked title to a third party, the trustee, who holds the title on behalf of the lender, also known as the beneficiary. The borrower is the trustor. A mortgage is a two-part instrument between the mortgagor and the mortgagee.

Which of these conditions does NOT create a stigmatized property that may or may not be disclosed under the laws of some states? A) The owner of the property has AIDS. B) A suicide occurred on the property. C) The property was the site of gang-related activity. D) A murder occurred on the property.

The answer is the owner of the property has AIDS. All the other events may stigmatize a property and may or may not allow disclosure to a prospective buyer under state laws. Under federal fair-housing laws, persons with AIDS are considered handicapped and members of a protected class. The fact that an occupant of a property has AIDS does not require disclosure to a prospective buyer.

The requirements for being an independent contractor for a salesperson and a principal broker include all of these EXCEPT A) most of the salesperson's income will be based on sales production. B) the salesperson has signed an independent contractor agreement with the principal broker. C) the principal broker will withhold taxes from the salesperson's compensation. D) the salesperson has a current real estate license.

The answer is the principal broker will withhold taxes from the salesperson's compensation. A broker does not withhold federal or Social Security taxes from an independent contractor's commissions. A principal broker is required to make those withholdings for all employees. An independent contractor situation must include the other three requirements to meet the conditions for independent contractor status established by the Internal Revenue Service (IRS).

For land to be taken by the government under its right of eminent domain, which of these must apply? A) There must be constructive notice. B) There must be a statutory dedication. C) The state takes the property through adverse possession. D) The taking must be for a public purpose.

The answer is the taking must be for a public purpose. Under the right of eminent domain, the government can acquire privately owned real estate for public use, which is defined very broadly. A government exercises this right through the process of condemnation, not through the passing of a statute. Adverse possession involves a person, not a government, taking ownership of a property through open and continuous use of a property. Under eminent domain, a government must work to negotiate with a property owner for the fair value of a property. Constructive notice is the legal presumption that a person through due diligence may be informed of a property's ownership.

Which of these would automatically terminate a residential lease? A) Sale of the property B) Total destruction of the property C) Failure of the tenant to pay rent D) Death of the tenant

The answer is total destruction of the property. Neither death of the tenant, failure to pay rent, nor sale of the rented premises would end a residential lease. Destruction of the property terminates the residential lease.

A person approaches an owner and says, "I'd like to buy your house." The owner says, "Sure," and they agree on a price. What kind of contract is this? A) Implied B) Void C) No contract D) Unenforceable

The answer is unenforceable. Until the parties put the agreement into writing, it is unenforceable, because under the statute of frauds, all transfers of real estate must be in writing.

The physical characteristic of real estate that means that every parcel of land is different is known as A) scarcity. B) indestructibility. C) uniqueness. D) immobility.

The answer is uniqueness. Uniqueness is the concept that no two parcels of property are exactly the same or in the same location. An individual parcel has no substitute because each is unique. Immobility means that the geographic location of a parcel of land can never be changed. Indestructibility means that land is durable and cannot be destroyed. Scarcity is an economic characteristic of land, meaning that when the supply of land is limited, the price of the land increases.

Due diligence is BEST defined as A) all the acts required of all parties to a transaction. B) using a good-faith effort to carry out the terms of a contract. C) the requirement to have an inspection on a property. D) a seller's obligation to complete a property disclosure.

The answer is using a good-faith effort to carry out the terms of a contract. Buyers are expected to use due diligence to verify the property will meet their needs, is zoned properly, and is in an acceptable condition. The sellers are expected to use due diligence to make sure their title being passed is marketable.

A property manager must take which of these into consideration to determine the net operating income (NOI) that a property produces? A) IRS taxes B) Vacancy/rent loss C) After-tax cash flow D) Debt service

The answer is vacancy/rent loss. The formula used to determine NOI is total gross income. Vacancy and rent losses and bad debt, which equals effective gross income (EGI) from which all property expenses are deducted, gives the NOI before debt service. IRS taxes are not part of the property expenses and are not included in the equation because they vary with each owner. After-tax cash flow is used for computing the return on investment (ROI).

A listing agent does not disclose to his client that he has agreed to manage a duplex for the buyer once it has been sold. The agent's action A) terminates the agency contract with the seller. B) violates his duty of disclosing material facts to the seller. C) is legal and ethical because his managing the property after the sale does not affect the seller. D) is legal under dual agency.

The answer is violates his duty of disclosing material facts to the seller. The agent has a fiduciary duty to keep the seller, his client, informed of all facts that could affect the transaction. The agent's future contract with the buyer may affect his ability to properly represent his seller's interest in his eagerness to have the property sold. Dual agency requires full disclosure of material facts. He may accidentally create an implied agency by acting in the buyer's interest. The action does not in itself terminate the contract with the seller.

A contract entered into while someone is under duress is considered A) voidable. B) fully valid and enforceable. C) executory. D) void.

The answer is voidable. Duress, fraud, misrepresentation, and contracts entered into by minors create voidable contracts. Such contracts are neither valid nor enforceable. A void contract has no legal force and is not enforceable due to its lack of an essential element, such as one made for an illegal purpose. An executory contract is a valid contract that has been signed but not fully fulfilled.

To create an executory contract, the offeree must accept the offer A) within 24 hours of receiving the offer. B) without any changes to the offer. C) only after it has been approved by an attorney. D) before the end of the business day of receiving it.

The answer is without any changes to the offer. An offer must be accepted without any changes. Time frames for acceptance are created in the offer and can vary. Contracts do not have to be written or approved by an attorney to be valid.

A school leased a small, commercial shopping strip. When classes started, the other tenants started complaining to the landlord that the students of the school were taking up most of the parking spaces, and their customers had no place to park. The lease required that the students park in spaces away from the other businesses. The school asked the students to park in the assigned spaces, but most continued to park where it was convenient. The landlord evicted the school. Is this action legal? A) No, the landlord cannot evict the school because parking is available to the public. B) Yes, the landlord can evict the school, and it is called constructive eviction. C) Yes, the landlord can evict the school for breach of the lease terms. D) No, because the school asked the students to park in the assigned spaces, they cannot be evicted.

The answer is yes, the landlord can evict the school for breach of the lease terms. If a tenant fails to fulfill any of the terms of the lease, they are in breach and may be evicted. A constructive eviction would take place if the landlord was at fault and the tenant could not use the property for the purposes defined in the lease.