*possible help/practice exams 1*
Government rights
(1) taxation (2) police power (3) eminent domain (4) escheat
1 foot
12 inches
1 square rod
30.25 square yards
mile
5280 feet
61. All of the following are economic principals that can affect the value of real estate EXCEPT a. competition. b. contribution. c. change. d. cost.
61. d. Competition, contribution, and change are all economic principals that affect real estate.
62. Linda has a three-year lease on her apartment. At the end of the three years a. the landlord must notify her if he wants her to vacate. b. she must give the landlord one month's notice of termination or departure. c. she may remain because an estate for years automatically renews. d. neither party need give the other any notice of termination.
62. d. An estate for years automatically terminates and requires no notice from either party.
62. Earnest money is entered on a closing statement as a a. credit to the seller. b. charge to the buyer. c. debit to the seller. d. credit to the buyer.
62. d. Earnest money is used to partially satisfy the transaction sales price on behalf of the buyer; therefore, it would be a credit to the buyer on the closing statement.
62. Which of the following listings is risky and open to fraudulent dealings? a. an open listing b. an exclusive right to sell c. an exclusive agency d. a net listing
62. d. Net listings, in which the agent keeps any part of the sale price above a given amount may subject a broker or associate licensee to license revocation or suspension.
63. One of the newer developments in mortgage lending is the use of a. computerized loan origination. b. adjustable rate mortgages. c. wraparound mortgages. d. regional reserve banks.
63. a. The use of CLO, computerized loan origination systems, shortens approval time and is growing in popularity.
74. A property sold for $57,300 and is subject to revenue stamp fees of .50 for each $500 (or portion thereof) of the sales price.What is the cost of the stamps? a. $571.50 b. $57.50 c. $95.50 d. $955.00
74. b. $57,300 ÷ $500 = $114.60 so use $115 (because the problem states "any portion thereof "); $115 × .50 = $57.50.
107. Mortgages and trust deeds differ in all of the following ways, except: A. Parties B. Securities C. Statute of Limitations D. Title
: B.A mortgage and a trust deed are security interests in property; they provide the legal tight to have the property sold in the event that the borrower defaults
A
A person moved into an abandoned farm house, modernized it, began to raise crops, notifies the true owner of her recent possession and refused to leave the property. She paid the property tax and stayed there seven years. Is there any chance that this person could claim legal title to the farm by adverse possession? A. Yes, because her use was continuous, open, hostile and exclusive. B. Yes, because she modernized the house. C. No, because farm land cannot be acquired through adverse possession. D. No, because a notified owner may never lose title to property though adverse possession
Answer: C. This would be a life estate known as a reservation.
A person sold their property and then reserved the right to stay on that same property as long as the person remained alive. This would be referred to as: A. pur autre vie B. remainder C. a life estate D. reversion
A clause in a lease that would allow adjustments of payments either up or down would be called
An Escalator
Answer: B.
An adjustable-rate mortgage, also known as an ARM is A. one in which the interest rate is fixed over time B. one in which the interest rate changes periodically, depending on index changes C. one in which the interest rate changes periodically, depending on the stock market D. a type of mortgage that the mortgagor can adjust himself
A gives a life estate to B for the life of C. B dies. Who has the estate?
B's Heirs
Alienation Clause
Balance Due upon selling home. Conventional loan only
Conditional Acceptance
Counter-offer or rejection coupled with new offer
Blanket Mortgage
Covers more than one property. Builder usually. Includes partial release clause
Amendment
Created to make changes or to add provisions after the original contract is created.
value of land
Dust D- demand U - Utility S- scarcity T- transferabilty
A to determine building density
Floor area ratios are used: A to determine building density. B by tax assessors to estimate value. C to estimate the amount of fire insurance needed. D None of the above.
Answer: A. Licenses expire on the last day of the licensee's BIRTH MONTH...and are renewed by paying renewal fees and showing proof that all continuing education requirements have been met.
For how many years are real estate licenses valid in Georgia? A. four years B. three years C. two years D. one year
When a property is rented for only one month, this is called tenancy:
For years
Valid contract
Has all essential elements. Valid = Legal
When a sale leaseback takes place, the advantage for the lessee is
He can deduct rent as an expense
Principals of Value
Highest and best use, substitution, conformity, anticipation, competition, plottage increment, contribution
Fee Simple Estate
Highest form of ownership Freely Transferable/inheritable
Fee simple absolute (fee simple estate)
Highest form of ownership. Ownership is for an indefinite duration. Ownership is freely transferable. It is an inheritable estate.
HOA
Homeowner's Association
$11
Homer Houser borrowed $60,000 at 14% annual interest and agreed to make monthly payments of $711 on his 30 year amortized loan. Of his fiirst month's payment , how much was applied to principal?
C A law which protects a portion of a family's home from debts, except taxes, mechanic's liens, and mortgages, that might result in a forced sale
Homestead protection is: A A legal life estate B Not the same as homestead exemption. C A law which protects a portion of a family's home from debts, except taxes, mechanic's liens, and mortgages, that might result in a forced sale. D All of the above.
Answer: D. A licensed salesperson or associate broker must work through a listing agreement established by his or her broker with the unlicensed party OR give up his or her license entirely before beginning work.
In order to provide brokerage services for an unlicensed individual such as a developer, builder, or management company, a licensed salesperson or associate broker must: A. work through a listing agreement established by his or her broker with the unlicensed party B. give up his or her license entirely before beginning work C. neither of the above D. either A or B
D pass the state exam
In order to receive a Georgia Salesperson's License you must: A be at least 21 years of age. B be a graduate of a High School. C take a 75 hour in-class prelicense course. D pass the state exam.
Answer: (D) - Meets all of the above requirements. In order to recover monetary damages from the Real Estate Recovery Fund, the claimant shall be required to show that they are not licensed, that they are not the spouse of a licensee, and that they have obtained a judgement. Note: "monetary damages" is compensation given to the injured party by a liable party.
In order to recover monetary damages from the Real Estate Recovery Fund, the claimant shall be required to show the claimant: A. is not licensed B. is not the spouse of a licensee C. has obtained a judgement D. meets all of the above requirements
B an estate of inheritance.
In real estate law, the word fee is closest in meaning to: A possession. B an estate of inheritance. C a tax or assessment on land. D a real estate commission.
Appurtenances
In real estate this means rights, benefits, or attachments that transfer with real property.
When a business is owned by one person, it would be called:
In severalty
Intrastate
In state
Answer: B. Bit of a trick question. The manager's fee must, in fact, be part of the agreement. Very often it is based as a percentage of rents, but may be a fixed fee or some other calculation.
In terms of property management agreements, which of the following is NOT required? A. An outline of the managers specific duties and responsibilities. B. The managers fee, stated as a percentage of rents. C. The names of all parties to the agreement. D. The terms of the agreement.
D how soon the property can be resold for profit
In the capitalization approach to establishing value, the selection of the cap rate to use reflects all of the following EXCEPT: A an investment return currently sought by investors. B how much net income the property will produce. C how long the property will continue to produce the projected net income. D how soon the property can be resold for profit.
Title
In the deed - Who is the owner and what are their rights. The sum of all the facts upon which ownership is based.
Capitalization Approach
Income properties, apartments, shopping centers
To open new trust account need:
Name of bank (FDIC insured), Name of account, account number
NAR
National Association of Realtors
Unenforceable
Neither can sue to force performance eg. sale contract that is oral; not written
What typ of lease would the renter pay all expenses?
Net
NOI
Net operating income
Transaction Broker
No Agency. A contract to perform ministerial acts for compensation. Disclosures still required. No confidentiality.
Trust Deed
Non-judicial foreclosure, title theory,3 parties - Beneficiary (lender), Trustee (holder of the trust deed), Trustor (buyer).
Inactive Licensees
Not agents
What happens if an agent breaches fiduciary responsibilites?
Not entitled commission and may be liable for actual damages.
Principal
Owner
Freehold Estates
Ownership
Universal Agent
POA Given for power of attorney to represent another. eg. for guardian or incompetent person
D restrict the grantee's conveyance of the property
Private restrictions cannot: A be based on aesthetic considerations. B restrict the owner's lawful use of the land. C take precedence over zoning ordinances. D restrict the grantee's conveyance of the property.
A legal action by a court to review and distribute an estate is called:
Probate
Executory
Promises made but not completed
conformity
Properties should be similar to surrounding properties for greatest value
Optioner
Seller - may sell if disclosed
Fee Simple Defeasible
Special Limitation with reverter (by grantor or heirs) Land used for specific purpose
Fee simple defeasible (fee simple estate)
Special limitation with Possibility of Reverter- Title transfers so long as the property is used for a particular purpose. There is an automatic reversion to the grantor or the grantor's heirs if the land ceases to be used for that purpose. The possibility or reverter is the possible future interest the grantor's heir(s) could have if the property ceases to be used for that purpose.
Lien Types
Specific (Real) and General (Real & Personal)
Adverse Possession
Squatter's rights - must be continuous, open, hostile, and "exclusive" for 20 years or 7 if color of title
Security Document
State contract
Steps in Appraising
State the problem, gather the data, analyze and interpret
Ambiguties
Statements or events whose meanings are unclear
Estopple Certificate
States current loan balance on loan when loans are sold
Demographics
Statistical study of population
A survivorship interest is created in what?
Tenancy by entirety
protecting the grantees interest against subsequent claims
The recording of deed results in:
C $350,000
Under federal antitrust law, an individual found guilty of a violation can be fined up to: A $1,000 B $35,000 C $350,000 D $1,000,000
Punitive Damage
Unrelated to cost of loss and merely awarded to punish wrongdoer
Punitive damages
Unrelated to the cost of the loss and are merely awarded to punish the wrongdoer.
Liquidated damages
Upfront damages, or compensation, are agreed to be paid by the breaching party in the contract. The earnest money may serve as a liquidated damage in a sales contract.
Metes (measurements) & Bounds (markers)
Used 2nd in GA if no plat of survey. Physical description of property (irregular shapes)
Legal Descriptions
Used in most agency Agreements, All Deeds, and All Real Estate Sales Contracts
Addendum
Used to change, insert terms, etc original contract
Rectangular (Gov't) Survey
Uses meridian (north/south) and base (east/west) lines. Not in GA
Answer: (D) - Illegal Interest Each state sets its own ceiling for the maximum interest rates lenders may charge. Rates above that ceiling are considered usurious and illegal.
Usury MOST nearly means: A. making loans without the benefit of co-signors B. lending money at fluctuating interest rates C. being capable of multiple usage D. illegal interest
When a grantor gives a future interest to a named grantee, it is called:
Vested remainder
Life Estates
Voluntary legal. The ownership of land for the duration of a person's life.
C
What is the maximum repayment term on a VA loan? A. 20 years C. 30 years D. 40 years
Answer: D - All of the above.
When a property is being sold on an assumption of the existing loan, complications with the transfer of some mortgage loans can be: A. the purchaser may have to qualify with the lender as if it were a new loan B. the purchaser may have to pay a higher rate of interest C. the loan may be non-assumable and due in full if the seller transfers ownership D. all of the above
Expressed Agency
When someone expresses their intention and states contract terms. Can be written or oral
Answer: B.
Which BEST describes the sale price for a property in an option agreement? A. the sale price would be determined when the option is exercised B. the buyer is guaranteed a fixed price when the option is signed C. the buyer can purchase the property by matching any other offer D. the optionor is obligated to pay the sale price when the option is exercised
Answer: A.
Which approach would probably be most accurate in the valuation of a church? A. COST APPROACH B. Gross income multiplier C. Income approach D. Sales comparison approach
The eve of a roof that extends over a property line
Which of the following are encroachments?
Answer: D. Repairs and recurring expenditures such as repairing a leaking roof or painting a structure are tax deductible expenses. installing something "new" is NOT tax deductible, ONLY repairs are.
Which of the following could be deducted as expenses from annual income taxes on an investment property? A. making additional principal payments B. replacing a roof C. installing a new furnace D. painting a structure
Answer: D.
Which of the following describes "prepayment"? A. an amount paid to reduce the interest on a loan before the due date B. an amount paid to reduce the principal on a loan before the due date C. can result from a sale, owner's decision to pay off the loan, or foreclosure D. both B and C
Answer: (A) amortized loan
Which of the following describes a mortgage where monthly payments include both principal and interest, Typically, the monthly payments remain constant, while the INTEREST portion is HIGHER in the EARLIER years, giving homeowners a larger tax deduction with HIGHER percentages of PRINCIPAL in the LATER years. A. amortized loan B. annuity loan C. acceleration loan D. assemblage loan
Answer: B. ONLY the COMMISSIONER can hold an inactive license, 5 out of the 6 Commissioner members MUST hold an active real estate license. The 6th Commission member must have nothing to do with real estate, he is just an employee.
Which of the following is NOT true of the Real Estate Commission Members? A. five must hold an active real estate license B. one must not hold an active license but can hold an inactive license C. five must have been residence of Georgia for at least five years D. the Commissioner is not the sixth member of the Commission
B A subagent has an implied authority to act as a dual agent
Which of the following is NOT true regarding a subagency relationship? A The listing broker is the principal of the selling broker. B A subagent has an implied authority to act as a dual agent. C A subagent can only perform the activities delegated and cannot be involved in making decisions which would directly affect the welfare of the seller. D The selling company should contact the listing company before showing property to a prospect.
Answer: D.
Which of the following is an agency of the federal government? A. Fannie Mae B. Freddie Mac C. Sallie Mae D. GINNIE MAE E. Bank of America
A It may allow more than one broker to share a commission paid by the seller
Which of the following is characteristic of an exclusive right to sell listing? A It may allow more than one broker to share a commission paid by the seller. B The seller may sell the property without being obligated to pay a broker's commission. C The seller must sell to a ready, willing and able buyer found by the broker. D The broker may sign a contract of sale on behalf of the seller.
Answer: C. ARMs are conventional loans. Options A and B are part of various government programs to help low and moderate income families as well as veterans find affordable home financing.
Which of the following is considered a conventional loan? A. FHA insured B. VA guaranteed C. commercial bank's ARM loan D. contract for deed
It makes warranties only for the time the property was owned by the grantee
Which of the following is distinguished characteristics of a special warranty deed?
special assessments
Which of the following liens has priority over the others?
Answer: D. Whenever you're selling property for someone for COMPENSATION, you MUST have a real estate license, HOWEVER, if you sell someones property without asking for compensation, you do not have to be licensed.
Which of the following persons would require a real estate license in Georgia? A. a licensed auctioneer selling real property at a single auction for another party for compensation B. a licensed forester selling a single parcel of timberland for another for compensation C. a licensed attorney acting outside the normal scope of the practice of law by selling for another for compensation D. any of the above
to insure that fullest and most productive use of privately owned land
Which of the following statement is correct with regard of the purpose of adverse possession laws?
A plentiful supply results in lower rates
Which of the following statements expresses the relationship between mortgage money and interest rates?
trustee
Which party would hold "naked title" in a deed of trust?
Answer: (B) - condemnation Condemnation is the process the government uses to take someones property for public good when the government exercises the right of Eminent Domain. The property owner is paid compensation for the property Escheat is the right of the government to take private property when an owner dies INTESTATE and has NO HEIRS or when someone ABANDONS their property and stops paying real estate taxes
Which would require compensation to be paid? A. police power B. condemnation C. escheat D. encumbrance
Answer: (B) - Grantor AKA Seller
Who acknowledges a deed so that is can be recorded? A. notary public B. grantor C. grantee D. clerk
Answer: D.
Who enforces the Georgia Fair Housing Law? A. The Commissioner B. The EEOC C. The Georgia Real Estate Commission D. The Georgia Commission on Equal Opportunity
Dower
Wife receives
date of recordation
With the exception of certain tax and/or mechanic's liens, priority of claim among liens is determined by:
Answer: C. A sale-leaseback is a technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
You are selling the house you live in, but the house you're moving to is not completed. You need to stay on in the house a while after closing. You work out a deal with the new purchaser called a A. no-rent lease agreement B. delayed possession for the new purchaser C. sale-leaseback D. lease for one year past closing
FHA loan
a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.
What is the implied first year overall capitalization rate?
a. 9.5 percent
statutory lien
by law such as judgement
What is the present value of $500 received at the end of each of the next three years and $1,000 received at the end of the fourth year, assuming a required rate of return of 15 percent?
c. $1,713.37
Given the following information, what is the required equity down payment? • Acquisition price: $800,000 • Loan-to-value ratio: 75% • Up-front financing cost: 3%
c. $218,000
Given the following information, what is the required equity investment due at closing? • Acquisition price: $800,000 • Loan-to-value ratio: 75% • Financing cost: 3%
c. $218,000
In 2007, you purchase a small office building for $450,000, which you financed with a $337,500, 25-year, fixed-rate mortgage. Up-front financing costs total $6,750. How much of this expense could be written off against ordinary income in 2007?
c. $270
If a landowner purchased a vacant lot six years ago for $25,000, assuming no income or holding costs during the interim period, what price would the landowner need to receive today to yield a 10 percent annual return?
c. $44,289.03
On a level-payment loan with 12 years (144 payments) remaining, at an interest rate of 9% percent, and with a payment of $1,000, the balance is:
c. 87,871.
What is the IRR, assuming an industrial building can be purchased for $250,000 and is expected to yield cash flows of $18,000 for each of the next five years and be sold at the end of the fifth year for $280,000?
c. 9.20 percent
Remodeling and rehabilitation:
c. Are expected to add value to the property.
Client (agency)
one who signed an agency agreement (contract, agreement) with a broker An agent owes fiduciary and confidential duties to clients if expressed in the agency agreement. If you represent, you have a client.
creating easement
popcorn P-private grant o-on agreement p-prescription c-condemnation o-operation of law r-reservation n-necessity
Liens paid first
real estate taxes and special assessments
State the Problem
reason for performing, and what type of property
constructive notice
recording documents
Gather the data (investigate)
red link, MLS, tax records, cost of labor and materials, conformity with comparables
Laws of Descent
refers to the body of law that determines who is entitled to the property from the estate under the rules of inheritance. Intestate
Easements
right to use the land of another for a particular purpose,
Special (limited) Warranty deed
states only that the grantor herself has done nothing to impair the title.
Avulsion
sudden transfer of soil
Judgement Lien
sued and didn't pay - by date of recording
implied contract
the agreement of the parties is demonstrated by their acts and conduct, verbal
trustor
the borrower under a deed of trust is the:
Vendee
the buyer person who is taking possession and gets equitable title to the property-land contract
if the grantor has been declared imcompetent by a judge
the deed is void
Convenant of warranty forever
the grantor promises to compensate the grantee for the loss sustained if the titel fails at any time in the future
quantity survey method
which method is generally regarded as the most thorough and accurate method of estimating building costs
FHA
which of the following organizatins requires appraisers to disclose any defects uncovered in their inpsection:
Contract must state?
who is holding trust money
to ensure that the property value is high enough to cover the loan amount
why do lenders usually use the services of an appraiser: ON STATE EXAM!!
181. Under FHA standards, the minimum ceiling height for a single family residential construction is: A. 7 ½ feet B. 8 feet C. 8 ½ feet D. 9 feet
: A. Although most ceiling heights are 8 feet, the FHA minimum requirement is 7 ½ feet.
106. The Hutchinsons, prospective buyers of a home, request a broker to find a loan for them. He would mostly likely contact: A. An institution lender, such as bank or savings and loan association B. A Federal Reserve Bank C. The Federal Housing Administration D. An FHA appraiser
: A. An institutional lender is more likely to be advancing the funds towards the purchase of a home. The Federal Housing Administration and the Federal Reserve Bank are not lenders in the home loan market
126. Which of the following is required in a valid homestead: A. Statement that claimant is residing on the premises and desires to claim it as a homestead B. Statement giving the exact cost of the homestead at time of purchase C. A description of the property including a description of the improvements D. Signature of both husband and wife
: A. Any person filing a homestead is required to reside on the premises at the time that he records the homestead and to sign a statement that he desires to claim it as a homestead. The person claiming a homestead does not have to give the cost, or a description of the improvements on the property and it can be filed by either a husband or a wife.
186. The hiring of a specialist in property management would be justified by: A. Absentee ownership B. Technological advances in building concepts C. Vacancy factor high than normal D. Urbanization
: A. In absentee ownership. The owner lives away from the property and is not able to adequately supervise it.
103. In imposing restrictions on a new large subdivision, the most practical method is to: A. Record the restrictions in the manner provided by law and make reference to them in each deed B. Publish the restrictions in a newspaper of general circulation C. Post the restrictions on the property D. Post the restrictions as covenants in all the deeds
: A. It is impractical to place the restrictions in each deed since there are usually a great number of restrictions. It is better to record the restrictions and make reference to them in each deed.
155. What supports the floor and ceiling loads? A. Joists B. Studs C. Supporters D. Mud sills
: A. Joists are the beams that run horizontal and parallel to each other and are used to support the floor and ceiling loads. Joists are "beams" not rafters.
3. If the loan-to-value ratio is low: A. The equity in property is high B. The equity is not affected C. The equity in the property is low D. None of the above
: A. Loan to value ratio is the ratio of the loan to the appraised value. If a 90% loan to value ratio is given by a lender, that indicates a 10% down payment, and a beginning equity of 10%. If the loan to value ratio is only 60%, the down payment is 40% and the beginning equity is 40%. The lower the loan, the higher the equity.
112. The two characteristics that have the most impact on the market value of land are A. uniqueness and immobility. B. improvement and indestructibility. C. demographics and construction costs. D. scarcity and permanence of investment.
: A. No two properties are exactly alike and land can't be moved from place to place to respond either to supply or demand. This uniqueness—sometimes called situs—and immobility can cause supply to fall short of demand and so increase property prices. The real estate market is said to be inflexible—slow to respond to changes in supply and demand. This is largely because of land's immobility and the length of time required to develop properties to meet suddenly increased demand.
159. Mr. and Mrs. Davis held real property as "husband and wife". Mr. Davis died and his will specified that "all his interests" were to go to his eldest son, Thomas. Son Thomas would: A. Inherit an undivided one half interest in the property B. Acquire a one half interest in the property C. Acquire title to the property in fee simple, as he is the eldest male heir D. Acquire no interest in the property as it would automatically go to the widow
: A. Under the community property law, either spouse may will his or her undivided one half to anyone they choose.
72. Of the following factors, which is the one that would not contribute to obsolescence? A. Wear and tear from use B. Out-of-date equipment C. Change of locational demand D. Misplacement of improvement
: A. Wear and tear from use in physical deterioration. Out-of-date equipment is functional obsolescence. Change of locational demand and misplacement of improvement are both economic obsolescence.
161. When a loan is fully amortized by equal monthly payments of principle and interest, the amount applied to the principal: A. Increases while the interest payment decreases by a constant amount B. Increases by a constant amount C. Stays the same D. Decreases while the interest payment increases
: A. When amortizing a loan by equal monthly payments, the amount applied to the principal gradually increases while the amount applied to interest gradually decreases.
73. Which of the following items would not be included in a bill of sale transferring a retail merchandising business: A. Inventory of stock B. Assignment of leasehold C. The trade name D. List of fixtures and equipment
: B. A bill of sale should include an inventory of the stock, the trade name and a list of the fixtures and equipment. It would not include an assignment of the leasehold because that is personal property that should be transferred separately.
62. Able sold six unencumbered properties to Baker. Part of the purchase price is a loan made by Able that is secured by a deed of trust on the six properties. This document is a/an: A. Quitclaim deed B. Blanket encumbrance C. All-exclusive trust deed D. Reconveyance deed
: B. A blanket encumbrance is created when more than one property is placed as security for a note and trust deed. Six properties are security for a single note and deed of trust, therefore it is a blanket encumbrance.
125. One side of a section equals how many feet: A. 43,560 B. 5,280 C. 2,640 D. 1,000
: B. A section is one mile on each side; one mile equals 5,280 feet.
20. A second offer received on a property prior to the seller's decision on the first offer should be: A. Evaluate by the broker against the first offer B. Submitted immediately C. Held pending a decision on the first offer D. Turned back to the offeree if it doesn't provide better terms
: B. All offers must be submitted immediately.
158. The liquidation of a financial obligation on an installment plan or basis is: A. Conversion B. Amortization C. Acceleration D. Conveyancing
: B. Amortization means to pay principle and interest over the life of the loan.
166. When reading an amortization table/chart, the amount shown as the payment based on a given loan amount, rate of interest and term indicates: A. Yield B. Both principle and interest C. Interest D. Principle
: B. An amortization chart (table) will show the monthly payment which includes both principle and interest required to pay off a loan of a given amount, rate of interest and term.
9. Lender's use the term "debt-income ratio" to refer to a: A. Part of closing costs B. Loan qualifying tool C. Requirement of the Federal Government D. Formula used in appraising property
: B. Debt income ratio indicates the fraction that your loan payment on the property is in relation to the net income from the property. This is used by lenders when qualifying a person for an income property loan and measuring their margin of safety.
180. Theft as it relates to real property, includes all of the following except: A. Entering and removing part of the realty B. Defrauding by misrepresentation C. Signing another's name without authorization D. Carrying away any portion of the security of a mortgage with the intent to defraud the mortgage
: C. Signing another person's name is forgery. It may lead to theft in our way of thinking, but is not defined as such in the Penal Code.
19. An attorney drew up a contract between a buyer and a seller for the purchase of a property. The agreement included a liquidated damages clause calling for the payment of $500 in the event the buyer should default. Prior to the close of escrow, the buyer decided that the home would not suit his family and canceled the purchase. If the seller were to sue for specific performance, he would most likely be: A. Successful because of the $500 is not adequate considering the value of the property B. Successful because the reason for canceling by the buyer was not strong C. Unsuccessful because the seller agreed to accept the $500 as liquidated damages in the contract D. Unsuccessful because an attorney drew the contract
: C. Since both buyer and seller agreed to the liquidated damages, the seller has agreed that if the buyer defaults, his sole claim will be to the $500.
51. Which of the following factors primarily affects supply in the real estate market? A. Population B. Demographics C. Employment D. Government financial policies
: D. Population, demographics and employment impact demand for a commodity, but government fiscal (spending and taxing) policies strongly influence availability and cost of credit for those who produce things to be sold (like new homes).
32. A third party who takes a promissory note that is complete and regular and has no knowledge of any defects is known as a/an: A. Endorser B. Maker C. Payee D. Holder in due course
: D. The party that accepts the endorsed note from the original payee without knowledge of any defects is known as the holder in due course.
170. When an owner of real estate sells the property to someone else, which of the "sticks" in the bundle of legal rights is he or she using? A. Exclusion B. Legal enjoyment C. Control D. Disposition
: D. To dispose of something is disposition. The legal term often applied to this stick in the bundle of rights is alienation. It is a right often taken for granted but did not exist in feudal times or in countries in which the land belonged to the people (the government).
Answer: C. A call option is most similar to an acceleration clause.
A call option is most similar to A. a lifetime cap B. a buy-down C. an acceleration clause D. all of the above
Devise
A gift of real property by will
an adjustable rate mortgage
A loan which uses an index and margin to determine the rate is called:
Conventional Loan
A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Must be greater than 80% LTV
Types of Agency Engagements
Agency Agreements, Agency Contracts
Puffing
An exaggerated opinion, many times in regards to a property's amenity
Licensee
Anyone with a Real Estate license
a lien against all real and personal property Ramsey owns in the county
Blaze fell from the front porch of Ramsey's house. Blaze sued for damages because of injuries suffered from the fall and won a judgement. The resulting lien is:
Bilateral contract
Both parties are obligated to perform in a bilateral contract.
In subagency, Selling broker is customer to to:
Buyer
CAP
Capitalization Rate or Central AZ Project
CC&Rs
Covenants Conditions & Restrictions
FHLMC
Freddie Mac
In a sale lease back transaction
Frees up the lessee's cash
FCV
Full cash value
Deed Types
General Warranty, special (limited) warranty, bargain and sale, quitclaim
GNMA
Ginnie Mae
competition
High profits attract the competition
GREC Authority
Issue licenses, impose disciplinary actions, pass rules and regulations, and establish fees
Value =
NOI / Cap Rate
Unenforceable
Neither parties can sue each other
Taxation
Property taxes
REIT
Real Estate Investment Trust
a quitclaim deed
The deed which contains no warranties is called:
Separate property
The real property owned by a husband or wife prior to their marriage.
that which affects or limits title or use of the property
The word "encumbrance" is best described as:
Post license salespersons course
Within 1 year, course counts as 6hrs of continuing education for renewal of license (every 4 years)
Expressed Contract
Writen or verbal contract
Creation of Agency
Written contract or action of parties
A
You are estimating the market value of an income producing residential property. Which of the following would be the most useful when comparing the gross rental income of the subject property with the sales price of a comparable property? A. Gross rent multiplier. B. The income approach. C. Net opening income. D. The replacement cost.
trustee's deed
a deed executed by a turstee conveying land held in a trust, DEED IS GIVEN TO A THIRD PARTY TO HOLD
For tax purposes, a substantial real property improvement made after the initial purchase is:
a. Treated like a separate building.
Income multipliers:
a. are useful as a preliminary analysis tool to weed out obviously unacceptable investment opportunities.
Which of the following is not an operating expense associated with income producing (commercial) property?
a. debt service
What term best describes the maximum price a buyer is willing to pay for a property?
a. investment value
Back up offer
after buyers accept contract, broker can hold on to other contracts as a back up but don't have to show owner.
Warehousing
assemble several loans into one for resale
What is the effective gross income multiplier?
b. 6.11
agent must have a license to
barsale B-buy A-appraise E-rent S-sale A-auction L-lease E-exchane
What percent of the rental income from residential property must be derived from the leasing of units occupied by tenants as housing?
c. 80 percent
Equal Credit Opportunity Act
cannot discriminate in lending (age, maritial status)
severance
changing an item of real estate to personal property by detaching it fro mthe land, cutting down a tree
general lien
claim of real and personal property
color of title
claim to title which appears valid, but may be legally defective.
Easement by prescription
claimant has made use of another's land ofr a certain period of time as defined by state law. Ga time period is 20 years
Deed Requirement: grantee
clearly named
Bargain and Sale Deed
court appointed sale
equitable lien
delinquent debt
Wind, water, erosion, accretion, reliction and avulsion
does not lose property
Adjustable rate mortgages (ARMs) commonly have all of the following except:
e. Inflation index.
Engagement
engagement = contract = agreement
Within 3 months of passing salesperson exam:
fee doubles
Life estates always reverts
fee simple
Leasehold title insurance
for renter's personal property
fair housing Act
freshcorn F- familial Status R- Race E- equal opportunity S-sex H- handicap C- color O-origin of birth R- Religion N- Nationality
downzoning
going from more active use to less active use
Pur Autre Vie
grantee's life estate based on someone else's life
Sale-leaseback
grantor sells property to grantee then leases it back
what an agent owes to a customer
had H-honesty A-accountability D-disclosure
Conflicts and Precedence
handwritten takes precedence over type-written over preprinted
Lessor
has legal title. Owns property
Escheat
he reversion of property to the state, or (in feudal law) to a lord, on the owner's dying without legal heirs.
1.50 per 500
intangible taxes
accrued interest
loan balance x interest rate / 360 x days
Test of fixtures
maria M- method of attachment A-adaption R-relation of parties I-intention A-agreement
Assessed value =
market value * assessment rate
Disclosure
material fact (anything you'd want to know if you were buying a house)
intangible taxes
new loan amount / 500 (rounded ) x 1.50
in buyer agency agreement if buyer doesn't purchase
no commission is generally owed
Quit Title Deed
no warranties
Deed Recording
not necessary - still valid - good idea
Pre-payment Penalty
penalty for paying off loan early. (1-5 yrs.) Conventional loans only
Lis Pendens
pending litigation
Divisee
person receiving gift for will
annexation
process of converting personal property into real property
variances
provide relief if zoing regulations deprive an owner of the reasonable use of the property, provides an exception for a minor deviation
Transfer Tax
sales price (minus any loan assumptions)/ 100 (rounded) x.10
Economic issues with Land
scarcity; improvable; permance of investment; situs
Deed Grantor
seller
seller terminates agency agreement without cause
seller may be liable for expenses incurred by the broker
seller refuses to sell
seller may refuse to sell but in a circumstance where full list price is offered the broker is entitled to commission
Loan take over (Subject to)
seller solely liable
Severance vs fixture in the real world
seller's disclosure
Usury Laws
set maximum interest rates (state laws)
Special Agent
specific transactions When the principal delegates a specific act or business transaction. eg. listing broker, durable POA, buyer agency
capable of being separated
the owner of land may also possesses air rights and subsurface rights. These rights are:
Grantor
the owner transferring title to or an interest in real property to a grantee
non-conforming use
the use was there first. Grandfathered in
Reliction
water perm receeds
Kiting
writing a false or dual contract
Arrears
you pay Jan 1st for the previous dec.
Police Power
zoning, codes, environment
Holographic Will
(Not GA) handwritten will without witnesses.
Intagibles Tax =
1. (Price x LTVR = Loan amt) 2. New Loan amount / 500 = (round up) x 1.5
First Mortgage
1st in priority
Joint Tenancy
2 or more have right to survivorship (to surviving owners), one title with equal shares Unities: possession, interest, time, title
synidicate
2 or more pool resources to operate investments
1 yard
3 feet
Township
36 sq miles
1 Acre
43,560 Sq Ft.
Leasehold Estates are:
"Real Property" rights in GA. You as a landlord can't make someone homeless. You have to go through the courts.
Graduated Lease
"Step up Lease" - Payments go up or down. Predetermined by leasing agreement. Think storage rental (2 months for $10 then $50/month)
Contracts should never have:
"preprinted" commission rates, listing duration, or protective penod.
Certain statements should be avoided by agents like,
"the standard commission in Woodstock is..." "contract terms are standard or nonnegotiable."
Real Estate Education, Research & Recovery Fund
$1,000,000 balance, should it fall below, may assess all licensees up to $30/yr payable at license renewal. Compensation to consumers only (non-licensees only) (no family members of licensees). Pay through a court order only. $25,000/transaction/lifetime. $75,000/licensee. • Automatic loss of RE license if money is paid out from the fund
Practicing without a license can get you:
$1000/day fine and cease & desist letter
trustor
( MORTGAGOR) a borrower in a deed of trust loan transaction; one who places property in a trust; also called a grantor or settler
Familial Status exceptions:
(1) All persons 62 or over; (2) 80% 55 or older if advertising is aimed, and facilities are for seniors.
Fair housing exemptions
(1) An Owner (FSBO) where no brokerage firm is involved (2) Owner occupied 1-4 plex rental (never on race), (3) Nonprofit religious orgs, (4) non-profit private clubs
All licensees acting as principals must:
(1) Disclose their license status in all advertising and contracts. (2) Deposit trust funds in broker account
Lead-Based Paint Act 1978
(1) Ensure that the purchase/lease contract include certain specified disclosures and acknowledgements. (2) Disclose the presence or testing of lead-based paint in homes built prior to 1978. (3) Provide buyer/tenant 10 days to test (contract). (4) Provide pamphlet — "Protect Your Family from Lead in Your Home."
Rule 520-1-. 14 and Law 43-40-25
(1) Mishandling Trust Funds, (2)Failure to deliver copies of any documents that the client signs in connection with the RE transaction, (3)Must give copy at signig (4) Failing to keep for Copies of all contracts to the transaction (3 years), (5)Practicing RE with a lapsed license (6)Practicing in another State without a license (7) accpting undisclosed commission
Son gives mother the right to use his property. Son wants it back when she dies. What kind of estate must he create?
Reversion
When a grantor retains a future interest, this is called
Reversion
Equitable title
Right to future legal title. Happens at contract acceptance
Appurtenances
Rights, benefits, or attachments transferred with real property
an estate for Roger, a possessory interest or right for roger, an estate in reversion for Manny
Roger Lodger leased a house from Manny Mansions The lease contract, when properly executed and delivered created:
TRANSFER TAX EQUATION
SP-AM X.10/100
VA
Secondary financing is prohibited in the purchase of a home using all the following loan types execept:
3 Types of Security Documents
Security deed, mortgage, trust deed
In subagency, Selling broker is sub agent to:
Seller
Open Listing
Seller enters into listing agreement with any number of firms. Retains rights to sell
What is the advantage of a sale with a leaseback?
Seller frees up cash for other uses
Option Contract
Seller keeps open offer to sell or lease real property in return for option money
Sale / Leaseback
Seller sells and immediately leases back.
Acknowledgement
Seller signs the deed. This is a voluntary act
SPDS
Seller's Property Disclosure Statement
Sub agency
Selling broker represents listing broker (agent) and the seller (sub-agent). The buyer is always a customer. Selling broker must have the permission of the listing broker to represent seller (MLS). Legal in GA but rarely done. The selling broker is an agent to the listing broker and a sub-agent to the seller.
Reverse Annuity Mortgage
Seniors with home paid off. Where lender pays owner
Conventional Life Estate
Set by grantor Full use until the end of tenant's life Transferred to remainder man or party other than grantor
Life Estate Pur Autre Vie
Set by grantor, and based on life of third party Reverts back to grantor or to remainderman
Life estate pur autre vie with remainder or reversion
Set up by grantor but based on the life of a third party. A conveys title to B, based on the life of C. Property reverts to A (grantor) on the death of the person by whose life it's measured.
State to State Issues:
Sherman superceeds
SBS
Sick building syndrome
Execute a contract
Sign the document
B Void
Smith enters into a contract with Jones. Unknown to Smith, Jones has previously been judicially determined of unsound mind. Under these conditions, the contract is: A valid. B void. C voidable. D unenforceable.
Three types of comps
Sold (best), active, expired
Types of Payment Plans
Straight Note (Term Loan), Partially Amortized (Baloon Note), Amortized Note
expiration of time, consent of all benefiting owners, acquiescence in repeated violations
Subdivision deed restrictions may be removed by:
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation( release seller form any future liability on loans secured by the real estate, buyer is solely responsible for any default on loan)
Novation
Substitution of original contract and release of obligation from original contract
Answer: D. Pete is allowed to sell the property to anyone else while the option is in effect, however, whoever buys the property from Pete has to accept the terms of the option while its in effect. Note: When you see the term "acquire" or "obtain", it means that someone "comes into" a contract/agreement or "buys" a property.
Sue acquires an option to buy a tract of land from Pete. Which of the following is NOT true? A. Sue is the optionee and Pete is the optionor. B. The property may be purchased at the discretion of the optionee. C. Pete may not diminish the value of the property (waste) during the period the option is in effect. D. Pete may not sell the property to anyone else during the period the option is in effect.
SARA
Superfund Amendment and Reeathuorization Act
TEFRA
TAx Equity and Fiscal Responsibility Act of 1982
Joint Tanancy
TTIP - time (must take title at same time), title (1 deed), interest (equal), right of survivorship, voluntary, In GA
GRM =
Take comp sold price and devide by the monthly rent to get individual GRM
Capital Gains
Taxable profit realized from the sale or exchange of an asset
A an easement in gross
Telephone lines are examples of: A an easement in gross. B a legally valid encroachment. C an easement appurtenant. D a non-revocable license.
easements in gross
Telephone, gas and electric lines placed on privately owned land are examples of:
Answer: (C) - Conventional Only Conventional loans have pre-payment penaltys
Which of the following loan types might have a pre-payment penalty? A. FHA B. VA C. Conventional D. None of the above
Answer: A. All FHA, and VA loans require escrow accounts Conventional loans over 80% -->when you put a down payment that is less than 20% on a Conventioal Loan requires an escrow account
Which of the following loans would require the purchaser to maintain an escrow account? A. all FHA, all VA, all conventional loans over 80% B. only loans in excess of 80% regardless of type C. only loans in excess of 90% regardless of type D. FHA and VA only, conventional loans never require escrow accounts
Answer: A. Regulation Z (Truth In Lending) creates a disclosure device only, and does not establish any set interest rates or required charges for credit such as closing costs or broker's commissions.
Which of the following must be disclosed to be in compliance with Regulation Z (Truth in Lending)? A) the cost of credit B) closing costs C) the tax bill D) broker's commission
Answer: B. Brokers owe accuracy in facts given out to 3rd parties (i.e. not principals). Accounting, obedience and loyalty are owed to the principal.
Which of the following obligations does a broker owe to a third party in a real estate transaction? A. accounting B. accuracy C. obedience D. loyalty
Federal Home Loan Mortgage corp; Mortgage Guaranty Insurance Corporation;
Which of the following organizations functions as mortgage insurance company?
A
Which of the following organizations is a loan purchaser in the secondary market? A. Freddie Mac. B. Mortgage companies. C. Commercial banks. D. Federal Housing Administration (FHA).
D
Which of the following parties would be exempt from the real license requirements? A. An auctioneer selling property at an auction for another party for compensation. B. A forester selling a parcel of timberland for another party for compensation. C. A person promoting the sale of real estate through listing in a publication and receiving a listing fee. D. An attorney in fact under a duly executed power of attorney to convey real estate from an owner or lessor.
C nonconforming use
Which of the following permits land use because zoning is not retroactive? A Variance. B Spot zoning. C Nonconforming use. D Bulk zoning.
A
Which of the following statements BEST describes a net lease? A. The lessee pays some or all of the operating expenses. B. The lessor pays all operating expenses connected with a leases space. Ce. The landlord receives a percentage of the gross income received by the tenant doing business on the leases property. D. The lessee pays only the rent.
property management contract
personal service contract- which terminates upon sale of peroperty or death of the owner or broker. general agency between principals- property owner and broker
government rights fed and local
pete P- policel power- zoning E- escheat- no will t- taxation- past due e- eminent domain
rectangular survey system( government survey system)
a system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines
Special Assessements
a tax or levy customarily imposed against only those specific parcels of real esatte that will benefit from a propesed public improvement like a street or sewer
nonconfroming use
a use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area
...
a white woman owned a duplex and lived in a half and rented out the other half. she put a for rent sign in the front yard. the first applicant was a black man whom she turned down stating that she didn't rent to men. he later learned that she had rented t Definition: a discrimination case based on the civil rights act of 1866 ON STATE EXAM!
If the investor is in the 33% income tax bracket, how much will a tax credit of $2,000 save the investor in taxes?
a. $2,000.00
How much would you pay for the right to receive nothing a year for the next 10 years and $300 a year for the following 10 years if you can earn 15 percent interest?
a. $372.17
How much would you pay to receive $50 in one year and $60 in the second year if you can earn 15 percent interest?
a. $88.85
For all except very high loan-to-value conventional home loans the standard payment ratios for underwriting are:
a. 28 percent and 36 percent
A contractual relationship where an individual must act in the best interests of a principal when dealing with a third party is termed:
a. An agency relationship.
Mortgage banking companies:
a. Collect monthly payments and forward them to the mortgage investor.
Probably the greatest contribution of FHA to home mortgage lending was to:
a. Establish the use of the level-payment home mortgage.
The dominant loan type originated by most financial institutions is the:
a. Fixed-payment, fully amortized mortgage
The dominant loan type originated and kept by most depository institutions is the:
a. Fixed-payment, fully amortizing mortgage. (Note, while this answer has traditionally been correct, the sharp increase in adjustable rate loans since about 2004, could alter the correct answer to b. Adjustable rate mortgage.)
In shopping center leases, rents are typically quoted on the basis of what type of area occupied by the tenant?
a. Gross leasable area.
Which of the following mortgage types has the most default risk, assuming the initial loan-to-value ratio, contract interest rate, and all other loan terms are identical?
a. Interest only loans.
Consider a 30-year, 7 percent, fixed rate, fully amortizing mortgage with a yield maintenance provision. Relative to this mortgage, a 10-year balloon mortgage with the same interest rate and yield maintenance provisions will primarily reduce the lender's:
a. Interest rate risk.
The best method of determining whether to refinance is to use:
a. Net benefit analysis.
A lease in which the tenant pays a rent based in part on the sales of the tenant's business is known as a:
a. Percentage lease.
The annual percentage rate (APR) was created in:
a. The Truth-in-Lending Act of 1968
The purchase price that will yield an investor the lowest acceptable rate of return:
a. is the property's investment value to that investor.
The overall capitalization rate:
a. is the reciprocal of the net income multiplier.
Which of the following forms of ownership involve both limited and unlimited liability?
a. limited partnerships
Testate
act of dying with a "valid" will
Intestate
act of dying without a "valid" will
Implied Agency
actions or conduct An implied agency is created when the parties actions or conduct communicate their agreement. eg. "take this deal. its the best for you."
How do you create an agency relationship?
actions or contract An agency relationship is created through a written contract or the actions of the parties.
Mortgage broker in sale/leaseback
acts as middlman between borrower and lender
canceling a contract
after due diligence a party could cancel the contract without penalty, therefore it could become a voidable contract, ex: unable to clear title
Statutory
after foreclosure - Not GA for loan. Yes GA for property tax foreclosure.
Riparian water rights
all landowners whose property is adjoining to a body of water have the right to make reasonable use of it. If there is not enough water to satisfy all users, allotments are generally fixed in proportion to frontage on the water source.
reverse exchange
allow replacement property to be acquired prior to the disposition of the exchanged property
Points
also called "discount points", are a form of pre-paid interest. One point equals one percent of the loan amount.
Property Tax Lien
always first priority, a lien imposed by law upon a property to secure the payment of taxes
Fee Simple
an estate in land, a form of freehold ownership. It is the way that real estate is owned in common law countries, and is the highest ownership interest possible that can be had in real property. Best form of ownership
Answer: B. Escrow accounts accumulate funds from closing costs and monthly payments to ensure that property taxes and homeowner's insurance are kept current.
an impound or reserve account, also know as escrow account, MOST benefits whom? A. the borrower B. the lender C. the trustee D. the trustor
Emblements
annual crops produced by cultivation legally belonging to the tenant with the implied right for its harvest
Prorating insurance
annual premium / 365 x days
Prorating property Taxes
annual tax / 360 x days ( from jan 1 to closing )
Questions about a situation
answer like you would your 10 year old daughter
Wasted
any action to make value go down
Net
any amount over the sellers desired sale price foes to the agent as commission
Second Mortgage
any mortgage other than 1st. (jr. mortgage)
Encumbrance
anything-such as a MORTGAGE, TAX LIEN, or JUDGEMENT LIEN; an EASEMENT; a restriction on the use of the land; or an outstanding dower right-that may diminish the value and the enjoyment of a property.
voidable contract
appears on the surface to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle.
Easement by Perscription
are implied easements granted after the dominant estate has used the property in a hostile, continuous and open manner for a statutorily prescribed number of years.
Taxes owed =
assessed value * Tax rate
Hadicap persons can:
at their expense modify a unit but must changed back (except doors)
punitive damages
awarded to punish wrongdoers not for actual loss
What amount invested at the end of each year at 10 percent annually will grow to $10,000 at the end of five years?
b. $1,637.97
How much would you pay for the right to receive $80 at the end of 10 years if you can earn 15 percent interest?
b. $19.77
If the property's NOI is expected to be $22,560 operating expenses $12,250, and the debt service $19,987, the debt coverage ratio (DCR) is approximately equal to:
b. 1.13.
joint tenancy -Survivor ship
pitts p- possession - undivided I- interest- 1- same rights T- time Same time t- title- same source s- survivor ship clause
Conforming conventional loans are loans that are:
c. Are eligible for purchase by Fannie Mae and Freddie Mac.
As a tenant, you wish to turn over all rights and responsibilities of your unexpired lease term to a new tenant. By doing so, you are:
c. Assigning your leasehold interest.
Double taxation is most likely to occur if the commercial properties are held in the form of a(n):
c. C Corporation
Which of these lenders is most likely to provide a construction loan?
c. Commercial Bank
Lender's yield differs from effective borrowing costs (EBC) because:
c. EBC accounts for additional up-front expenses that lender's yield does not.
Which of these loans is a life insurance most likely to invest in?
c. Large office building loan (nonconstruction)
Which of the financial firms is most likely to invest in a large, long-term mortgage loan on a shopping center?
c. Life insurance company
Real Estate Syndicates traditionally have been legally organized most frequently as:
c. Limited Partnerships
Special Allocations of income or loss are available if the form of ownership is a(n):
c. Limited Partnerships
With regard to double taxation, distributions, and the treatment of the losses, general partnerships are most like:
c. Limited Partnerships
The asset manager is NOT responsible for:
c. Making maintenance decisions.
The numerator of the standard housing expense (front-end) ratio in home loan underwriting includes:
c. Monthly principal, interest, property taxes, and hazard insurance.
Both the owner and the manager may be better off if management's compensation were based on a percentage of the property's:
c. Net operating income.
The tenant is responsible for paying property taxes and insurance in a:
c. Net-net lease.
Lockout provisions are primarily intended to reduce the lender's:
c. Reinvestment risk
The following are necessary for a lease to be valid, except:
c. Tenant's contact phone number, or address, in the event of an emergency.
For non-real estate corporations, which of the following is not a potential advantage of a real estate sale-leaseback?
c. The firm benefits from property appreciation that occurs after the sale- leaseback.
Which statement is false concerning the limited partnership of ownership?
c. The limited partners cannot enjoy tax benefits but the general partners can.
Demolition of an existing property on an urban site will likely occur:
c. When the site value, assuming a new use, exceeds the value of the site under its existing use, plus the cost of demolition.
The operating expense ratio:
c. expresses operating expenses as a percent of effective gross income.
With a mezzanine loan
c. the borrower's promise to pay is secured by the equity interest in the borrower's limited partnership or limited liability company.
undisclosed dual agent
cannot give undisclosed advice
Inducements
cannot guarantee profit
Assemblage
combining two or more properties into one for resale
GREC Chair and Vice Chair
come from 6 members
Order of note
comes first, you sign before any kind of colateral document
essential elements of contracts
comic C- competent parties O-objective M-mutual agreement I-in writing C-consideration
contingent fee
commission paid to the buyers agent only if the buyer finds and buys a home (generally for sale by owner)
Offerer can withdarw the contract until:
communicated acceptance by the offeree. UNLESS a separate consideration is paid to make the offer irrevocable
Four Elements of Real Estate Contracts
competent parties, mutuality, consideration, legal
Four Essential Elements of All Contracts
competent parties, mutuality, consideration, legal
Phase I Environmental Inspection
conducted on commercial properties, according to the contract, during due diligence period.
Option money
consideration - forfiet if not exercised
option contract
contract by which an optionor generally the owner gives and optionee(buyer or leasee) the right to buy or lease the owner's property at a fixed price within a certain period of time- only one required to act
If trust account is interest bearing:
contract must state this along with who gets the money
depreciation
cost recovery annual allowance of wear and tear written off on taxes (res. 29.5 yrs investment 39 yrs) cost basis / 29.5 = depreciation
Fidelity Insurance for CAM
covers mishandling of funds; $60,000 to Max handled; separate policy per Association, 30 Day notice to cancel.
Mortgagee's title insurance
covers only lender
Owner's title insurance
covers only owner
Commission "earned"
producing a ready, willing, able buyer, and meeting seller's terms (procuring use)
Boards or MLS cannot:
prohibiting membership or restriction of services to "Qualified" person. Felony
Conditional (defeasable) fee
property deeded with conditions attached
Deed Requirement: legal description
property description. Not an address
Mechanic's Lien
proptection for contractor. Prioritized by date of performance. Must record lien within 90 days of completion of the job. Must sue within 1 year of date of recording.
Easements are terminated due to:
purpose no longer existing, merger of properties, abandoment, dmoinent teneme releases - quitclaim
transfer by courts
quitclaim or quiet title suit
General Agent
range of tasks/on-going When the principal delegates a broad range of powers and the relationship is expected to be on-going. eg. property manager
Agency termination
readies R- revocation/renunciation E-expiration A-agreement D-death of either party I-incapacity E-extension of purpose S- subject of law change, illegality
Partial release clause
releases a property when sold
Index Lease
rent based on index according o lease agreement
Percentage lease
rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tentant doing business on the leased property
Index lease
rent tied to index outside of owner and tenant's control eg. consumer price index
When you see the word mortgage:
replace it with loan. If the sentence doesn't make sense it is collateral.
termination of easement
repman R- release. E- expiration P- prescription M-merger A- Abandonment N-necessity
Universal Agent
represent all business all the time. Ex: working for alzhiemers patient
Attornery in Fact
represent through an agreement (power of attorney).
Personal Assistants
require 3 agreements that all must contain the duties and the compensation of the assistant. (1) affiliate and assistant. (2) affiliate and broker. (3) assistant and broker. Unlicensed assistant can perform ministerial acts only.
GREC Quarum
requires 4 members present to vote
Option
reserving the right to purchase or sell property
zoning types
residential, commercial, industrial, aesthetic
Deed Restrictions
restrict the way in which a property, such as a house or condominium, can be used. Ie: HOA
Option
right to buy at a later date.
Leasehold Estate
right to occupy because you are renting
easement
right to use land of another
recorded plots( lot and block system GA)
second legal description in Georgia, this system uses lot and block number referred to in a plat map filed in the pbulic records of the county where the land is located
Gross Rent Multiplier Approach
single family investment properties
Life estates can be
sold, leased, mortgaged
Consideration
something of value. Doesn't have to be monetary. One of the four essential elements of all parties.
escalation clause
sometimes called an escalator, that lets a home buyer say "I will pay x price for this home, but if the seller receives another offer that's higher than mine, I'm willing to increase my offer to y price.
Special assessment
tax for improvaments - paid by only those who benefit from improvments - ie: sidewalks
Lease Option
tenant purchase Tenant has the option to purchase the property within or at the end of there lease.
a privately owned corporation and is active in buying FHA and VA mortgage loans
the Federal National Mortgage Association is:
Open Listing
the agent that sells collects comission & if the owner sells the agent doesn't receive comission
Acceleration clause
the clause in a morgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant
Alienation Clause ( Due on sale clause, or call clause)
the clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lenders option if the porperty is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender's approval. (prevents assumable loans.)
deed executed by a minor
the deed is voidable
mental impairment at the time of signing deed
the deed is voidable
Divisor
the donor of real property in a will
General Warranty deed
the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). Best protection for buyer
Convenant of quiet enjoyment
the grantor guarantees that the grantee's title will be good against thrid parties who might birng court actions to establish superior title to the property
Convenant of further assurance
the grantor promised to obtain and deliver any instrument needed to make the title good, GA DOESN'T RECOGNIZE THIS COVENANT
Laches
the legal doctrine that a legal right or claim will not be enforced or allowed if a long delay in asserting the right or claim has prejudiced the adverse party
beneficiary
the lender under a deed of trust is the
express contract
the parties state the terms and show their intentions in words, either oral or written. statute of frauds, require contracts to be written to be enforceable in a court of law
Testator
the person died with valid will
Testator
the person who makes a will, is alive, any property included in the will can still be conveyed by the owner
Eminent Domain
the power to take private property for public use by a state or national government. Paid
Hypothecate
the practice where a borrower pledges collateral to secure a debt or a borrower, as a condition precedent to a loan, has a third party (usually an affiliate) pledge collateral for the borrower.
protect the chain of title
the purpose of recording a deed is to
Gross lease
the tenant pays a fixed rent, and the landlord pays all taxes, insurance, repairs, utilities and maintenace connected with the property
Net lease
the tentat pays all or most hte property charge in addition to the rent
Lease termination
time, breach, mutual agreement, condemnatiion, bankruptcy and foreclosure.
Must have written permission (listing agreement)
to advertise or change listing prce
Liquidated damages
to avoid a lawsuit if one party breaches the contract, the partiese may agree on a certai namount of money that will compensate the nonbreaching party
subrogation
transfer future claim to another party, in return, to get paid off.
Demise
transfers rights in Real Property through a lease. deMise --> Lease
Limited or Special Deed
typical after foreclosure sales, limited warranties
Vendor
under a typical land contract the seller is known as vendor- land contract
liquidated damages
unfront compensation agreed to be paid by breaching party
Unexercized Option
uni-lateral
When are Points paid?
upfront to lower interest rate over term
General Assessment
used for property taxes
Affiliates
usually independent contractors and are paida% of their broker's total commission.
Unenforceable contract
usually oral, may also appear on the surface to be valid; however neither party can sue the order to force performance
Invalid Contract
validity has ended (expired). Ex. Expired listing
Deed Requirement: consideration
valuable or good
Covent of seisin
warrants the grantor has the right to convey title
covenant of encumbrances
warrants the property is free from liens or encumbrances, unless expressly stated
...
waste Definition: permanent damage to real property caused by the party in possession, harming the interest of other estate holders (future owners) STATE
Life estates can't be
wasted or willed
bundle of rights for property
weedsup W- will E- enjoy e- encumber d- do nothing s- sell u- sue p- possess
buyer agency relationship
when a broker enters into a contract with a buyer
Encoachments
when a building, fence, or driveway illegally extends beyond the land of its owner or legal building lines, an encroachment occurs.
actual notice
when a party has actual knowledge of a fact
intestate
when a person dies without a will real esate and personal property pass the decedent's heirs accordin the state's statute of secent and distribution
Title passes
when it is delivered and accepted, does not have to be recorde
Unenforceable Contract
will not stand up in court. Ie: verbal lease
Enforceable Contract
will stand in court. Statute of Frauds: must be in writing = RE sales contract, deads, leases over one year, brokerage agreements
Tenant duties from Landlord-tenant act include:
withholding rent; wasting property; removal personal property/trade fixtures.
Reality of Decent
without duress/fraud A requirement of a valid contract which requires a contract is entered into without duress, misrepresentation of fraud. Voidable by innocent party, valid by wrongdoer.
C holds a life estate for his life and also purchases the interest of the vested remainder man. What interest would C now hold?
Fee simple estate
Which of the following is an example of a freehold estate:
Fee simple estate
What is the difference between fee simple and non freehold?
Fee simple is freely inheritable, while non freehold is a lease
FIRREA
Financial Instituitions Reform Recovery and Enforcement Act of 1989
Right of Refusal
First option or continue to market Giving someone the first option to buy or continuing to market home while potential buyer fulfills contingencies
Gross (straight) Lease
Fixed rent/owner pays other property expenses while tenant pays utilities
Tie-In
Forcing you to buy one thing in order to get another. Stopped by Sherman.
Security deed
GA - 2 parties, non judicial foreclosure (don't have to go to court) - equitable title - an outright transfer of title to the property to the lender to secure the debt and is given back to buyer once debt is repaid
Answer: C. Georgia law requires that licensees disclose who they represent in writing no later than the time of the written offer. If it said "should" - answer: A.
Georgia law REQUIRES that licensees disclose who they represent in writing? A. at the first meeting B. at closing C. no later than the time of the written offer D. it is not required, it is suggested
D has a broader application than the FBPA
Georgia's Uniform Deceptive Trade Practices Act: A requires a transaction take place, before a violation is charged. B has a narrower application than the FBPA. C is a vehicle for regulating interstate antitrust violations. D has a broader application than the FBPA.
Answer: B. Appurtenant easements afford the most protection since they are generally a permanent feature of the property. Thus, in the case of a sale, the lake access passes to any new owners. By contrast, an "easement in gross" is between TWO INDIVIDUALS, which would severely limit the attractiveness and value of the property if the original owner wished to sell.
Ginny owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which easement would give Ginny the most protection? A. an easement in gross B. an appurtenant easement C. an easement by necessity D. a license
a straight loan will cost more to repay than an amortized loan
Given the same term, interest rate and loan amount, then:
A property is held in joint tenancy and one of the parties dies testate, what is true?
Goes to the joint tenant survivor
Reservation
Grantor reserves pocession of all or portion of land for the rest of their lives
Leased fee interest
Lessor's interest
Caveat emptor
Let buyer beware
Caveat venditor
Let seller beware
Caveat Emptor
Let the BUYER beware
Caveat Venditor
Let the SELLER beware
A summer camp uses a property as a weekend retreat, the owner does not create an encumbrance but instead gives the camp:
License
An irrevocable right to use a property would be called an easement:
License
A,B and C hold unequal interest in a piece of land; they own it as:
Tenancy in common
How would two buyers take title if they were not related?
Tenancy in common
Which of the following would be the holding of title received for the common area of a condo?
Tenancy in common
When a property is sublet, the new lessee is referred to as:
Tenant
A party who holds possession of realty after expiration of a lease holds it as a
Tenant at sufferance
How can a corporation hold title?
Tenant in common
Two sisters want to buy a property and leave it to their heirs. They should take title:
Tenant in common
Net Lease
Tenant pays portions of ownership expenses such as taxes, utilities and maintenance
Percentage Lease
Tenant pays rent plus portion of their gross income
Estate at Sufferance of Tenancy at Sufference
Tenant remains without consent
What is Estate
Tennancy
Constructive Conviction
Tennant sues landlord to not pay rent. Tennant must leave and never return
If a utility company wanted an easement on a parcel of land, but the landowner did not want his property encumbered, what would the owner give the utility?
License
J was given the right to use W's land, but W could revoke this right at any time. This is an example of:
License
Requirements a broker needs to earn a commission.
Licensed, compensation agreement, and procuring cause of the sale
Income tax lien
Lien for IRS taxes. By date of performance.
A remeinderman receives the property after
Life estate
In subagency, Selling broker is agent to:
Listing Broker
Who holds earnest $ in sub agency?
Listing broker
Types of agreements that create an agency relationship?
Listing, Buyer Agency and Property Management Agreements
LTV
Loan to Value
Ground Lease
Long term agricultural lease.
anticipation
Look to the future value
Lender Qualifying Borrower
Looks at Debt to Income Ratio, Credit Score, Payment history, Employment history, cash reserves
Responsibilities of Agent
Loyalty, Obedience, Accounting, Disclosure, Skill, Care and Diligence
method of determining if item is fixture
MARIA
ASSESSED VALUE
MARKET VALUE x TAX RATE= ASSESSED VALUE
General Warranty Deed
MOST PROTECTION-
Mabel has abandoned the easement
Mabel Moseley owned an easement footpath across neighboring property. School children would occasionally use the path in walking to and from school. When Mabel became interested in roses, she fenced her entire lot but did not provide a gate to the footpath. What is the probable result of this action?
GA Property Owners Association Act 1994
Makes CAM mandatory for any condo development
Forfeiture clause
Many contracts contain a forfeiture clause, which means that under certain circumstances, one party must forfeit or give up something to the other party. If found in the sales contract, the earnest money may be given to the seller if the buyer breaches the contract.
Planned unit development
Many townhouses are planned unit developments. This is designed for a high density of dwellings and a maximum use of open space.
Three appraising approaches
Market Data, Replacement Cost, Income Approach
CMA calculated like:
Market data approach except more subjective)
Lease needs to contain clauses for
Term, restrictions, security deposit, options, property destruction by act of God
Severance vs fixture
Tests MIA = Method of attachment; intention of attaching parties; adaption of the article
A all exclusive listings must be in writing
The Commission requires: A all exclusive listings must be in writing. B all gross listings must be in writing. C all open listings must be in writing. D all listings must be in writing.
B the owners
The Directors of a condominium owners' association are elected by: A the officers. B the owners. C the occupants. D the management company
The purchase of an $80,000 home with a new first mortgage loan
The Federal Truth in Lending Law applies to which of the following transactions?
Answer: D. 640 ÷ 4 ÷ 2 = 80 acres. 640 ÷ 4 ÷ 4 = 40 acres. 80 acres + 40 acres = 120 acres. 120 acres x 43,560 = 5,227,200 square feet
The S1/2 of the NE1/4 and the NW1/4 of the SE1/4 would contain A. 2,344,560 square feet. B. 3,484,800 square feet. C. 4,395,340 square feet. D. 5,277,200 square feet.
Easemtent by necessity
created by court order based on the priciple that owners must have the right to entere and exit their land-the right of ingress(enter) and egree(leave) they cannot be landlocked
Separate Property
Owned by either spouse before marriage or received as gift
Contract for deed
Owner financing deed. No qualifying, fewer closing costs, low or no down payment. Risky for buyer since he can lose equity. Deed transfers at final payment
Terminate Listing: Acts of Parties
Owner fires, Mutual agreement, Broker abandonment (loss of license)
Answer: A. PITI reserves must equal the cash amount that the borrower would have to pay for principal, interest, taxes, and insurance for a predefined number of months.
PITI reserves applies to A. a cash amount the borrower must have on hand after down payment and closing costs B. an amount which is financed with the mortgage C. both A and B D. none of the above
D a 90% loan-to-value conventional loan
PMI is most likely to be charged when the buyer is getting: A an FHA graduated payment plan loan. B a VA loan. C an 80% loan-to-value conventional loan. D a 90% loan-to-value conventional loan.
Sublease
Partial transfer of leasing rights. Only original tennant liable to landord
Express Contract
Parties specifically agree orally or in writing
Legal action taken to divide property owned as tenants in common
Partition action
Universal Agent
Party is given full power of attorney
A lease where the lessee will pay a fixed rent plus a portion of the gross sales is called:
Percentage
An easement in gross is considered:
Personal right
Listing Agreement
Personal service contract securing firm to find a readying, willing and able buyer
Three types of Depreciation
Physical Depreciation, Functional Obsolescense, External (economic) Obsolescence
Issues with land are:
Physical or Economical
economical characteristics of property
Piss p- performance of investment I- improvements S- scarcity S- situs
Agency law duties to client
Poland. P-personal performance O-obedience of legal instructions L- loyalty A-accountability N-notice- both written and informed D- due care/Diligence
PETE
Police Power - Eminent Domain - Taxation - Escheat
PCBs
Polychlorinated biphenyls (pollutant)
Of the unites required for joint tenancy, which one is necessary for tenancy in common?
Possession
Novation
Release of liability of one contract to create another
A sells a commercial apartment building to B. The present leases are:
Remain valid
What is the name of the third party that will receive a life interest in a property, upon the death of a life tenant?
Remainderman
In a sale lease back transaction:
Rental payments may be tax deductible
A graduated lease means:
Rents increase as tenants are procured
Landlord-Tenant Act
Requires certain duties of the landlord and the tenant.
Statue of Frauds
Requires deeds, contracts, leases to be in writing to be enforceable
Statute of Frauds
Requires real estate contracts, deeds, certain leases be in writing in order to be legally enforcable
involuntary lien
created by law without action of owner eg property taxes: specific, involuntary
principles of agency
crip C- compensation R- reimbursement I- indemnification P- performance
What is the present value of the following series of cash flows discounted at 12 percent: $40,000 now; $50,000 at the end of the first year; $0 at the end of year the second year; $60,000 at the end of the third year; and $70,000 at the end of the fourth year?
d. $171,835.94
How much will a $50 deposit made today be worth in 20 years if the compound rate of interest is 10 percent?
d. $336.37
The maximum loan-to-value ratio on a VA guaranteed loan is:
d. 100 percent.
On the following loan, what is the best estimate of the effective borrowing cost if the loan is prepaid in six years? Loan: $100,000 Interest rate: 7 percent Term: 180 months Up-front costs: 7 percent of loan amount
d. 8.7 percent.
Potential sub-prime borrowers include persons who:
d. All of these.
Which of the following statements is true about 15-year and 30-year fixed- payment mortgages?
d. Assuming that they can afford the payments on both mortgages, borrowers should choose a 30-year mortgage over an otherwise identical 15-year loan if their discount rate (opportunity cost) exceeds the mortgage rate.
Which of these ratios is an indicator of the financial risk for an income property?
d. Both a and b, but not c
Currently, which type of financial institution in the primary mortgage market provides the most funds for the residential (owner-occupied) housing market?
d. Commercial banks
Which of the following financing structures provides for 100 percent financing?
d. Complete (land and building) sale-leaseback
The typical anchor tenant in a neighborhood shopping center is a:
d. Grocery store.
Home equity loans typically:
d. Have tax-deductible interest charges.
Private mortgage insurance (PMI) is usually required on _____ loans with loan- to-value ratios greater than _____ percent.
d. Home, 80 percent.
Which of these is not typically a responsibility of a property manager?
d. Income tax analysis.
If a mortgage is to mature (i.e. become due) at a certain future time without any reduction in principal, this is called:
d. Interest-only mortgage.
Which of the following best describes the taxation of gain and losses from the sale of Section 1231 assets?
d. Net gains are taxed as capital gains; net losses are taxed as ordinary income.
10. Which of the following statements is false?
d. Net passive losses can be used to offset dividend income from a REIT stock.
A real estate investment trust generally:
d. None of the above
In recent years, the mortgage banking industry has experienced:
d. Rapid consolidation.
Using financial leverage on a real estate investment can be for the purpose of all of the following except:
d. Reduction of financial risk for the leveraged investment.
A mortgage that is intended to enable older households to "liquify" the equity in their home is the:
d. Reverse annuity mortgage.
The reduced importance of certain institutions in the primary mortgage market has been largely offset by an expanded role for others. Which has diminished and which has expanded?
d. Savings and loan associations; mortgage bankers.
The internal rate of return equation incorporates:
d. initial cash outflow and inflow, and future cash outflow and inflow.
Ratio analysis:
d. serves as an initial evaluation of the adequacy of an investment's cash flow.
comprehensive loss underwritng exchange (CLUE)
database agents can access to research insurance claims
All liens are prioritized by:
date of recording except the Mechanic's lien
Deed
deed describes land and LAND ONLY
Reversionary
deeded to the grantee for the grantee's life - reverts back to grantor's heirs when life tennant dies
Voidable Contract
defected element and voidable by injured party. Misrepresentation, Minor, Duress.
tax advantages of real estate
deferment of capital gains, deductions for depreciation and losses, loan origination fees and points (capital improvements and special assessments are not deductible)
Depreciable base
depreciation + land
A lease is unaffected by:
destruction
Landlord duties from Landlord-tenant act include:
destruction of property; quiet enjoyment/use; good repair; withholding of utilities; security deposits; inspections; and assignments/subleases.
boot
difference between the values of the exchanged properties in 1031 which is taxable
Under current federal income tax law, what is the shortest cost recovery period available to investors purchasing residential rental property?
e. None of the above.
general partnership
each share all decisions of running business, all liable for debts and actions of others If one file bankruptcy or dies they will need to reorganize
Appraiser compensation:
effort and time
no contract
ehnb the offer is withdrawn prior to acceptance regardless of the time element in the offer to bind offeror, the offeree must accept unconditionally and communicate acceptance
Title Search
ensure marketable title Conducted to ensure that the buyer and lender receive marketable title or one that would not place either party in legal liability.
discount point
equals one percent of the loan amount
Open End Mortgage
equity loan where the loan acts as a line of credit against your property
Remainder
estate goes to a third party (remainder man) named by grantor when grantee dies
Appraising
estimate of value for lenders, sellers, buyers, etc.
Puffing
exaggeration of facts
exclusive-agency buyer agency
exclusive contract where broker entitled to payment only if they locate property
exclusive buyer agency
exclusive contract where buyer pays agent even if the property is found on their own
Special Stipulations
express intents not in the original contract for that one sale
Homestead
family homestead protected from judgements
Other factors that influence value:
financing, real estate taxes, zoning changes, and migration of people
What can you use Trust fund money for?
for service charges, minimum deposit, or credited for commission (remove within 30 days of consumation)
judgement lien
found guilty in a lawsuit and doesn't pay
an appurtenance
from the standpoint of the dominant estate, an easement is:
writ of attachment
giving the sheriff or other person custody of property until a lawsuit is concluded
void contract
has no legal force or effect because it lacks some or all the essential elements of a contract. A contract that is void was never a glegal contract. ex, use of forged name in a listing contract would make the contract void
Loan assumptions
higher interest rate (buye), less time to close, but lower closing costs.
saving and loans associations
historically, the foremost single source of funds for residential mortgage loans in this country has been:
Tenancy by Entireties
husband /wife, TTIP, (not GA), only 2 parties (husband/wife)
Curtesy
husband receievs
the deed is valid but the condition is unenforceable
if o'malley deeds property to 0'halloran on the condition that no englishmen live there, what is the status of the deed? ON STATE EXAM!
When is the original offer terminated?
if seller changes one sentence in the original offer and sends it back to the buyer
Physical issues with Land
immovable; indestructable; unique (homogenous)
reproduction cost
in appraising a historically significant residence built in the Victorian era using the cost approach, an appraiser will probably appraise it on the basis of its
lower interest rates
in order to make adjustable rate mortgage loans more attractive to borrowers, lenders offer
Graduated Lease
increasing the rent as the property becomes valuable
Ministerial Acts
informative for consumer Those acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of a active representation.
physcial characteristics of property
ini I- immobility n- non- homogeneity I- indestructibly
Penalty for deed restrictions
injunction or suit for damages
Express Agency
intentions stated An express agency is created when the parties state the contract's terms written or orally.
Market Conditions agents should be aware of
interest rates, employment levels, demographics, vacancy rates, absorption rates
supply and Demand
interest, economy, age demographics
Encroachment
intrusion of a fixture on the property of another
Statute of frauds
Requires that certain instruments, such as deeds, real estate sales contracts, and certain leases, be in writing in order to be legally enforceable.
Covenant of quiet enjoyment
Requires that the lessor will not enter the property without notice, unless it is an emergency.
Warranty of habitability
Requires the landlord to keep the property in good condition by maintaining the common areas, equipment, etc.
...
Residential Sales are ? Definition: (1) The sale of any improved residential property of four units or less (2) unimproved property intended for four units or less. (3) agricultural property of 10 acres or less (4) leases with options to purchase all or a portion of improved property of four or less residential units. (5)dispositions of business interests involving property of four or less residential units.
Gross Lease
Residential lease. Lessor pays taxes and insurance; contains an escalation clause meaning if landlord costs go up they can pass them on to the tenants - Think Renting a house
Answer: D.
Restrictive covenants and restrictive conditions have different penalties if breached. Which of the following penalties is/are possible under a restrictive covenant? A. loss of property only B. loss of property or an injunction C. suit for damages only D. injunction or a suit for damages
A lease and a life estate have which of the following words in common?
Reversion
Answer: (B) - Reverse Annuity Mortgage
What type of mortgage exists when the LENDER pays the BORROWER a fixed amount of money every month? A. shared appreciation B. reverse annuity C. growing equity D. there is no such mortgage
Answer: (A) - property tax
What type of lien always takes first priority if a forced sale occurs? A. first mortgage B. income tax C. mechanic's D. property tax
Lien
is a charge against property that provides security for a debt or an obligation of the property owner.( real estate taxes, mortgages, judgments and mechanics liens
Loan origination fee
is a payment associated with the establishment of an account with a bank, broker or other company providing services handling the processing associated with taking out a loan.
time share estate
is a real property estate having the character and incidents of a fee simple estate, or of a leasehold, an estate for years, unless changed by statute
Easement in gross
is an individual or company interest in or right to use someone else's land. Power company, rail road on your land
Appurtenant Easements
is attached to the ownership of one parcel and allows this owner the use ofa neighbor's land. Said the run with the land
beneficiary
is the holder of a note for a trust- LENDER
Dominant Estate
is the parcel of real property that has an easement over another piece of property (the servient estate) parcel that benefits
Deficiency Judgment
judgment against borrower for any debts owed (loan plus expenses, leins, etc.) and not satisfied by foreclosure sale.
Mortgage
judicial foreclosure, Iien theory 2 parties -"mortgagee" vs "mortgagor"
Fair Market Value requirements
knowledgeable buyers and sellers and an arms length transaction (no undue pressure)
Reversionary Right
landlord/owner/lessor right to retake property on the expiration of lease terms
Fiduciary
legal or ethical relationship of trust b/t 2 or more parties
Torrens system
legal registration of land where title doesn't transfer until documents registered in Torrens office
When a lessee signes a net lease, the taxes, insurance and maintenance are paid by the:
lessee
Changes to offer must be
lined through, dated initialed and timed
Exclusive-right-to-sell
listing broker paid not matter if another broker sells or not in exclusive buyer agency broker entiltled to commission even if he didn't show property. (nonpayment is breach)
Protective period
listing clause for protection of the broker which extends agreement past expiration
Deed Requirement: granting clause and exceptions
lists encumberance and ownership types
PMI( PRIVATE MORTGAGE INSURANCE)
loan amount x rate / 12. to get loan amount multiply sales price by ratio
Pre paid interest
loan amount x rate of interest /360 x number of days
Valid contract
meets all the essential element that make it legally sufficeint or enforceable, and is binding in a court of law
Handicap
mental or physical limitation. Cannot change terms or conditions.
Void Contract
missing one or more essential elements. Never was a contract
Debt Service
money required to retire debt
Concurrent
more than one owner
Package Mortgage
mortgage in which the personal property and furniture is included in the cost of the house.
voluntary lien
mortgage, securing loan
nondisturbance clause
mortgagee agrees not to terminate lease in the event of foreclosure
Within 1 yr of passing salesperson exam:
must apply for license or retake test
Competent Parties
must be at least 18 years old and of sound mind. One of the four essential elements of all parties.
RECORDING A DEED
must be recording in the clerk of superior court office in the county of the property
Addendums (exhibits)
must be refrenced in original contract
GREC and Crimes
must notify the GREC of a crime of Moral turpitude within 10 days of conviction
Executor
named by testator to carry out wishes of testator
Easement creation due to:
necessity, condemnation, reservation, prescription, grant
Physical Depreciation
neglect or deffered maintenance
Analysze and Interpret
neighborhood and site considerations
open buyer agency agreement
nonexclusive contract that buyer can enter into with any amount of agents and agent who finds property is compensated
Legal
nothing illegal in the contract. One of the four essential elements of all parties.
Situs
of real estate (land) is where the land is located
Quitclaim Deed
offers no promises that the seller has full claim to the title, no protection against a cloud or divorce. Least buyer protection
Misrepresentation
on application illegal
Severalty
one and only one sole owner
Exclusive Agency Listing
one broker lists the property and only broker or co-broker that sells gets commission
Severalty ownership results when
one of two joint tenants dies
limited liability partner
one or more run business while limted partners only liable to extent of their investment
each section is
one square mile or 640 acres, with 43,560 sq feet
Appurtenant Easement
one that benefits the dominant estate and "runs with the land", i.e., an easement appurtenant generally transfers automatically when the dominant estate is transferred.
Customer (non agency)
one who has not signed an agency agreement with a broker. Agents perform only ministerial acts for customers. If you work with, you have a customer
Mortgage Lien
only "voluntary" lien. Prioritized by date of recording
Recording title
only gives constructive notice
Who can Broker's share commissions with?
only licensed people (agents or other brokers (referral).
Exclusive Right to Sell
only one broker gets paid. Broker gets paid regardless of procuring the buyer
unilateral contract- one promise
option contract, is one sided agreement. one party makes a promise to entice a second party to do something. the second party is not legally obligated to act. however if the second party does comply, the first party is boligated to keep the promise
FBSO
owner where no brokerage firm is involved. Cannot own more than 3 homes
Subsevient Estate
parcel of real property that has an easement and suffers, only, ( can't disregard easement)
specific lien
particular property only eg property taxes: specific, involuntary
security
parties join with others in an effort of making profit from efforts of others
limited liability company
pass through income to members to avoid double taxation
Variance
permission to do something otherthan what is currently there. Does not change the zoning
time share ownerhsip
permits multiple purchasers to buy interests in real estate, time shares are most common with resort property ownership. the owners occupancy and use of the property are limited to the contractual period purchased.
Lessee
person renting. Quiet enjoyment and use
License
personal permission, is revokable
Chattel
personal property
Trade fixtures
personal property of the commercial tennant
1 mile
5,280 feet
5. Sue Addison owns an apartment building that was constructed in 1965. According to federal law, which of the following must be attached to the leases Sue prepares for prospective tenants? a. a report of the building's radon level b. a lead-based paint disclosure statement c. an illustration of the building's location relative to electromagnetic fields (EMFs) d.any known instances of groundwater contamination in the building's water supply
5. b. Federal law requires that a lead-paint disclosure form be given to all tenants and buyers if the building was constructed before 1978.
GREC Disciplinary Actions
(1) Reprimand, Censure, and Require Education. (2) Reports from accountant (trust account violations). (3) Fines up to $1,000 for single infraction or $5,000 for multiple infractions. (4)Suspension or Revocation of a license. (5) GREC must investigate a written sworn complaint and publish (on the GREC web site) suspensions/revocations.
Dual Agency requires "informed consent form" that states:
(1) Serving clients whose interest are adverse, (2) Full disclosure (facts, relationships) except confidential information. (3) Client have to consent. (4) Client has read, understands and consents to all issues of dual agency
Fair housing acts make illegal:
(1)Refuse to sell, rent, or negotiate, (2) State property is not for sale or restricted, (3)Change terms and conditions, (4)Give different terms for loans to diff people, (5)Deny membership in MLS, (6) Steering, (7)Blockbusting, and (8) redlining
Licensees must:
(1)never give legal advice to clients or customers. (2) Advise clients to seek out experts, (3)Account for money / valuables / property, (4)Take reasonable skill and care: obey laws and rules.
Adjustable Rate Mortgage
(ARM) - "interest" changes based on an index. Can go or down. The index cannot be controlled by the lender and must be readily verifiable by the borrower
Partially Amortized
(Balloon Note) - Interest and "some" Principal paid over the term. Requires a baloon payment at the end.
Acceleration Clause
(Due on Default) - calls the "balance" due because of breach.
GA Fair Business Practices Act
(FBPA): Intrastate Law (GA). Focuses on deceptive advertising prohibiting any type of misleading advertisement in meeting. Actual transaction must occur.
Graduated Payment Note
(FHA 245) - "payments" start low and then go up yearly, leveling off about the 5th to 10th yëar. Typically causes "negative amortization" where the loan balance increases.
Uniform Deceptive Trade Practices Act (UDTPA)
(GA's Sherman Law). Focus on price fixing and acts restricting business compettion. Broader in scope than FBPA. No actual transaction must occur. Individual, broker or state can bring suit. Injunctions, fines, and/or triple damages.
Noncupative Will
(GA) a verbal will given to TWO objective witnesses who must put it in writing within 30 days. Also called Death bed will.
Formal Will
(GA) legal age and sound mind with no due influence - must use TWO wintesses
GA Real Estate Commission
(GREC) 6 members appointed by the governor and approved by the senate.
Plat of Survey
(Lot and Block) (Short Form) - Used in GA - need lot #, Block #, Subdivision and county. ****No measurements involved
Private mortgage insurance
(PMI) insurance paid if LTV on loan is greater than 80%. Private insurance to protect lender if borrower defaults on the loan. Borrower pays premium
PITI
(Principal, Interest, Taxes and Insurance): The total monthly payment for a property with an amortizing loan that includes the principal, interest, taxes and insurance
Real Estate Settlement Procedures Act
(RESPA) Only new loans. Inform borrowers of Closing costs. HUD booklet, estimate, HUD-1, no kickbacks.
Shared Appreciation Mortgage
(SAM) mortgage in which the lender agrees as part of the loan to accept some or all payment in the form of a share of the increase in value (the appreciation) of the property.
Transfer tax =
(Sales price - Loan Assumption) / 100 = (Round up) * .10
Civil Rights Act of 1968
(Title VIII) Residential propçy only (not commercial). Race, Color, Religion, National Origin, Sex (1974), Handicap (1988), and Familial Status (1988).
Characteristics of value:
(USDT) Utility, Scarcity, Demand, Transferability
substitution
(comparables) property only worth what one can get another one just like it. Best indicator of value.
Market Data
(sales comps) residential and vacant land with comps. Make adjustments (CPA, CBS) to comps. Calculate weighted average
Replacement Cost
(summation) New Properties only, no comps
Section
1 Sq Mile = 640 Acres
144 in
1 square foot
1. The purchase contract is the most important document in the sales process because a. the agent is not guaranteed payment without it. b. it provides the road map for the closing. c. preparing sales agreements is good for the legal business. d. unless a real estate transaction is in writing, state law dictates how the money is spent and distributed.
1. b. The contract outlines the rights, duties, and responsibilities of the parties and gives guidance to the closing officer about allocation of fees.
1. Which of the following actions is legally permitted? a. advertising property for sale only to a special group b. altering the terms of a loan for a member of a minority group c. refusing to make a mortgage loan to a minority individual because of a poor credit history d. telling a minority individual that an apartment has been rented when in fact it has not been rented
1. c. The Fair Housing Law does not require a lender to make a loan to an individual who does not meet credit standards.
1. Jeff and Alexandra Clancey have paid a total of $10,500 in mortgage interest and $1,500 in property taxes in this tax year. If they are in the 28% tax bracket, their tax savings is a. $12,000. b. $1,000. c. $294. d. $3,360.
1. d. The taxpayer is permitted to deduct $12,000 from earned income. At the 28% tax rate, the savings would be $3,360; ($10,500 + $1,500) x 0.28 = $3,360.
one DP
1/8 of 1% of yield
10. Although the term "purchase money mortgage" applies to any loan that finances the purchase of real estate, it is commonly used to refer specifically to a a. loan taken back as part of the sales price by the seller. b. refinance loan. c. loan on property already owned that is used to finance the purchase of a second property. d. loan that is packaged for sale on the secondary market.
10. a. Seller financing is often referred to as a purchase money mortgage.
10. The economic characteristics of land are a. scarcity, fixity, modification, and situs. b. scarcity, non-homogeneity, immobility, and modification. c. indestructibility, situs, fixity, and scarcity. d. situs, fixity, scarcity, and immobility.
10. a. The economic characteristics of land are scarcity, fixity, modification, and situs.
10. Who will fund a primary loan? a. a mortgage broker b. a mortgage banker c. both d. neither
10. b. The mortgage banker is an intermediary between the primary and secondary markets and may make direct loans. A mortgage broker operates only in the primary market and brokers the loan.
Tenancy in Severalty
100% ownership by one person or legal entity Passes to heirs, terminate by sale or death
100. The statute of frauds requires that a. real estate brokers answer buyers' and sellers' questions honestly. b. the seller of real estate provide a written disclosure about the condition of the property. c. certain contracts, including those for the sale of real estate,must be in writing to be enforceable. d. a mortgage borrower has three days in which to cancel the loan.
100. c. Every state has adopted the statute of frauds, which requires offers, acceptances, land contracts, and other real estate documents to be in writing to be enforceable.
100. A residential broker usually relies on which form of valuation to assist a seller in setting the listing price? a. ad valorem tax assessment b. fee appraisal prepared by a licensed appraiser c. cost approach analysis d. competitive market analysis
100. d. A competitive market analysis is the least expensive method of determining value for a seller with much greater accuracy
100. Which of the following changes in zoning should result in compensation to the owner? a. spot zoning b. down-zoning c. buffer zoning d. "taking"
100. d. When property is rezoned so that it severely limits land use, it may be considered the same as being condemned or "taken." This is a legal issue.
11. A comprehensive buyer representation agreement would address the a. buyer's desired property description. b. duties of the agent, termination date, and compensation agreement. c. agent's contact information. d. family contact names and numbers.
11. b. A buyer's representation agreement should be a specific outline of what is expected of the broker and of the buyer.
11. Any federally related loan may require the borrower to carry special insurance if the property is located in a. an earthquake area. b. a flood zone. c. an ocean hazard district. d. a desert.
11. b. The government issues flood hazard maps, and for mortgage loans within those areas, borrowers must carry flood insurance, which is available from the federal government.
11. All are examples of involuntary conveyance of title EXCEPT a. adverse possession. b. condemnation through eminent domain. c. tax sale. d. dedication.
11. d. Dedication is the giving of land to a municipality for public use.
12. An option to purchase is a. a unilateral contract. b. a bilateral contract. c. an installment contract. d. enforceable by the optioner.
12. a. An option to purchase is enforced by one party (unilateral contract).the optionee, the buyer.
12. To qualify for innocent landowner status, a purchaser under federal law must have the property environmentally inspected a. prior to taking title. b.within 30 days of ownership. c. in the first year of ownership. d. when economically feasible.
12. a. Under federal law, to qualify as an innocent land owner, a purchaser must have the property professionally inspected for environmental hazards prior to taking ownership. If the property is not inspected prior to ownership, the owner is responsible for all previous environmental hazards.
12. Buyers who sign a document indicating the price and terms on which they are ready to purchase described property have created a. a purchase offer. b. an option. c. a contract of sale. d. a listing contract.
12. a. Until it is accepted by a seller, the document remains simply a purchase offer.
13. Which of the following investment opportunities would involve the greatest risk even though it would likely produce the highest rate of return? a. before construction is started b. during construction c. after construction d. upon occupancy by anchor tenants
13. a. There is very little security in an investment before construction is started, therefore, to attract an investor, the developer must offer the greatest return.
13. There is an oral agreement to lease a property for one year at $500 per month. This agreement is a. unenforceable because it is not in writing. b. enforceable. c. unenforceable because there was no binder deposit. d. none of the above
13. b. A lease that is not for more than one year does not come under the Statute of Frauds.
13. While Dana Nelson spends six months in Europe, she continues to pay rent to her landlord, but actually collects rent from her friend Tim Baylor, who is living there while she is gone. The situation is known as a. an assignment. b. a sublet. c. a lease option. d. a right of reverter.
13. b. With a sublet, Dana remains responsible for the rent.
40 acres
1320'x1320'
20 acres
1320x660 0r 660x1320
14. A seller, anxious to sell, tells a cooperating agent during a showing that the agent will be given a riding lawnmower if he brings an acceptable offer by the end of the week. All of the following are true in this situation EXCEPT that the a. agent may accept the lawnmower because it is not cash. b. agent should report the incident to the listing broker. c. agent would be in violation of the law if he took the lawnmower. d. cooperating agent could legally receive the lawnmower from his broker.
14. a. Salespersons may only receive compensation from their principal broker. Gifts of merchandise, use of luxury cars, trips, and outings are also compensation and may only be given to a broker who disposes of them in accord with the company policy.
14. Economic or external obsolescence refers to loss of value due to a. wear and tear. b. outdated design. c. factors outside the property lines. d. incurable defects in the subject property.
14. c. External obsolescence refers to outside factors (a nearby landfill, unemployment in the community) that affect the value of the subject property.
14. If a principal terminates the listing agreement during the listing period, the broker may be able to do any of the following EXCEPT a. collect a commission for a transaction in process. b. recover marketing expenses. c. encourage termination of any contract in process. d. continue to cooperate with any subsequent listing broker.
14. c. The agent is prohibited from interfering with any transactions that originated during the relationship.
15. All the following statements are true EXCEPT a. the Veterans Administration has the authority to make direct loans to veterans. b. the government sets the maximum loan amount on all VA guaranteed loans. c. lenders are usually willing to make a "no down payment" loan for up to four times the maximum entitlement of the veteran applicant. d. the veteran has liability for any claims paid by the Veterans Administration on a VA loan.
15. b. The government sets the maximum guarantee not the loan amount.
15. The right to occupy a property without interference for a specified period of time is known as a a. trespass. b. prescriptive easement. c. leasehold. d. suit for possession.
15. c. A lease defines the period of time during which the tenant has the right to occupy and enjoy a property. At the end of that period, the right reverts to the owner.
15. An appraiser may take which factor into consideration when appraising a property? a. familiar status b. race of neighborhood c. religions of area churches d. square footage
15. d. People who prepare appraisals or any statements of valuation, whether they are formal or informal, oral or written may consider any factors that affect value.
16. The most profitable way in which a particular property can be utilized is known as its a. plottage value. b. highest and best use. c. increasing return. d. principle of progression.
16. b. Analyzing a parcelfs highest and best use (in terms of money) is a standard part of the appraisal process.
16. The landlord has the right to access the premises a. for the purposes of making unannounced "spot" checks. b. in case of an emergency. c. when the tenant is away for an extended time. d. all of the above
16. b. The tenant has the right of "quiet enjoyment" and the landlord must give proper notice prior to accessing the premises.
16. Which is true of owner's title insurance? a. It guarantees ownership in perpetuity. b. It is transferable to the next property owner. c. It will reimburse for title losses up to the face amount of the policy. d. It protects the lender against loss of lien rights.
16. c. Buyer's title insurance covers monetary losses due to a covered loss of title up to the face amount of the policy. It does not guarantee ownership, nor is it transferable.
17. An assessment is a special type of appraisal used for a. property tax purposes. b. income tax returns. c. estate tax returns. d. divorce settlements.
17. a. Assessors set the value at which real estate will be taxed.
17. Which of the following would not be allowed under the Federal Fair Housing Act? a. The owner of a 10-unit apartment building renting to men only. b. A landlord refuses to rent his double home in which he lives to a woman with three children. c. An American Legion will rent rooms only to members who belong to the American Legion. d.Housing limited to persons age 62 or older.
17. a. The Federal Fair Housing Act prohibits discrimination based on gender.
17. The owner of Highland Apartments has determined that his vacancy rate is less than 5%.What, if any, action should he take? a. He should spend less money on advertising. b.He should renovate the lobby. c. He should survey his market to determine if the rents should be increased. d.He should do nothing.
17. c. A five percent vacancy rate is considered normal; anything lower means rents are too low.
1 mile
1760 yards
Deed Requirement: grantor
18 yrs old, sound mind, signs the deed
18. A tenant is delinquent on his lease payments. The owner can a. have his bill collector evict the tenant from the premises. b. turn off the electricity and water. c. personally evict the tenant after giving 24- hour constructive notice. d. bring court action.
18. d. The Landlord Tenant Act in most states clearly establishes specific court procedures with strict time lines.
18. The closed sales price of an income property divided by its gross monthly rent equals the a. estimated market value. b. capitalization rate. c. gross income multiplier. d. gross rent multiplier.
18. d. The gross rent multiplier is a number derived from a sale comparable to determine the value of an income property being appraised. The gross rent multiplier is multiplied by object property monthly rent to determine its current market value.
18. The buyer gives the seller's agent a check for $5,000 to serve as earnest money accompanying a purchase offer. He asks that the agent not deposit the check for two weeks and also asks him not to tell the seller about this.When the agent presents the offer he should a. say nothing to the seller but inform his supervising broker of the situation. b. say nothing to the buyer but tell the seller the exact status of the check. c. mention nothing about the check to anyone and wait to deposit it as requested. d. explain to the buyer that he has a fiduciary duty to inform the seller about the check.
18. d. The seller has a right to full information before making a decision about the offer. The buyer has a right to honest and straightforward treatment, which includes notice that his instructions will not be obeyed.
19. Which of the following is not associated with a mortgage/note? a. a defeasible fee/indefeasible fee b. an alienation/acceleration clause c. a hypothecation/APR d. a pledge of property/evidence of debt
19. a. A defeasible/indefeasible fee is associated with a deed.
19. An abstract of title provides which of the following? a. insures ownership in perpetuity b. pays owner for full or partial title loss c. insures against unrecorded documents, such as unpaid previous property taxes d. a history of documents in public records that affect title to the property
19. d. An abstract of title is a history of a property's legal records prepared by an abstracter. There is no insurance for loss of money or possession if title problems occur in the future.
19. No federal fair housing laws are violated if a landlord refuses to rent to a. people with children. b.Vietnamese. c. deaf persons. d. students.
19. d. Occupation and source of income are not protected classes under federal laws.
90% loans pay __ PMI
2% of loan amount
2. The area of a lot that measures 850′ × 850′ is how many square yards? a. 80,278 b. 240,833 c. 26,759 d. 722,500
2. a. 850′ times 850′ divided by 9 is just less than 80,278 square yards.
2. An example of a seller's credit on a closing statement is a. a broker's commission. b. the contract sales price. c. the pay-off of a first mortgage. d. a transfer tax.
2. b. A credit represents an amount of money that is to be received by a party at settlement.
2. The seller delivers the deed and the buyer pays the purchase price in the step referred to as a. commitment. b. underwriting. c. warehousing. d. closing.
2. d. The process of transfer of title and settlement of accounts takes place at the closing.
95% loans pay __ PMI
2.5% of loan amount
20. In order to appraise property valued over $1,000,000 in a federally-related transaction, the person performing the appraisal would need to be a. state certified. b. federally licensed. c. certified by the bank. d. approved by the government.
20. a. Under FIRREA, appraisers need to be certified by the state to perform an appraisal as part of a federally-related transaction when the property value exceeds $1,000,000.
20. The alienation clause found in most security instruments states that the full amount will be immediately due and payable if the a. borrower is late with three monthly payments. b. property is sold to a new owner. c. hazard insurance policy is allowed to lapse.
20. b. The term "alienation" means transfer of title. The lender reserves the right to call in the loan if the property is sold.
20. A homeowner has a balance of $149,570.75 remaining on the mortgage. The interest rate is 9.5% and the monthly payment is $1,303.55. After the next two payments, the balance will be a. $149,451.30. b. $148,267.20. c. $149,330.91. d. $149,570.75.
20. c. $149,570.75 x 0.095 / 12 = $1,184.10 month interest; $1,303.55 . $1,184.10 = $119.45 principal; $149,570.75 - $119.45 = $149,451.30; $149,451.30 x 0.095 / 12 = $1,183.16 month interest; $1,303.55 . $1,183.16 = $120.39 principal; $149,451.30 - $120.39 = $149,330.91.
Broker
21 years old, HS or GED, Actively licensed for 3 of last 5 years, 60 hour course, pass state exam, GCIC, Apply for license in 1 yr
21. Assuming the net operating income remains constant, what will happen to the present value of the property if the capitalization rate increases? The present value will a. increase. b. stay the same. c. decrease. d. increase at first and then decrease.
21. c. The greater the cap rate, the lower the value.
21. A seller has $5,000 closing costs, a $93,000 loan balance, and pays 7% commission on a $125,000 sale.What are his net proceeds from the sale? a. $81,490 b. $43,510 c. $23,250 d. $18,250
21. d. $5,000 + $93,000 = $98,000 total dollar expenses of closing. Convert 7% to a decimal and multiply. $125,000 × .07 = $8,750 commission; $125,000 - $98,000 - $8,750 = $18,250 net proceeds to seller.
21. How may FHA insured and VA guaranteed loans be assumed? a. on payment of an assumption fee to the seller b.with guaranteed agreement of the selling broker c. under no circumstances d. either freely or on qualification of the buyer, depending on the date of the loan
21. d. Older FHA and VA loans are freely assumable; newer ones require the next borrower to prove financial qualification.
22. Which of the following would terminate a listing agreement? a. the death of the broker b. the retirement of the salesperson c. the receipt of an offer to purchase d. the expiration of the salesperson's license
22. a. The death of either party will cancel the listing.
22. A broker would not be violating a law for making the statement "This is the most beautiful view in the state," because it is considered harmless a. showmanship. b. puffing. c. advertising. d. fibbing.
22. b. As opposed to potentially fraudulent misrepresentation, obvious exaggeration is considered acceptable puffing.
22. A broker may execute a contract on behalf of his principal when he or she is a(n) a. special agent. b. trustee. c. attorney-at-law. d. attorney-in-fact.
22. d. The power of attorney authorizes the agent to perform certain acts in place of the principal.
23. A doctor calls and states he is prequalified to buy a $300,000 home. He is not familiar with your area and asks where he should live. You reply, "The Heights Estates, that's where several professionals like yourself live." This is an example of a. blockbusting. b. steering. c. redlining. d. doing your job.
23. b. Steering is the channeling of home seekers to or away from particular neighborhoods.
23. Even though the broker hires a salesperson as an independent contractor, the broker is still responsible for a. payment of licensing and professional fees. b. providing a desk and telephone for the salesperson. c. the legal and ethical behavior of the salesperson. d. seeing that the salesperson attends office meetings and training seminars.
23. c. The broker is responsible under the law and licensing regulations for the activities of any licensees affiliated with that firm.
23. Of the following, the most important factor that a lender will consider would be a. the borrowers investments. b. the borrower's marital status. c. payment history of previous car loans. d.payment history of previous home loans.
23. d. The real estate lender will be greatly concerned with how a prospective borrower has performed on previous real estate loans.
24. A mini-ranch is being established on a newly acquired 25-acre parcel of land. The new owner plans to enclose the property with a split-rail fence. The rectangular lot has 1,000 feet of frontage on the state road. How many feet of fencing will be needed? a. 2,090 feet b. 4,178 feet c. 4,270 feet d. 4,595 feet
24. b. (25 acres x 43,560 square feet per acre) / 1,000 front feet = 1,089 feet deep; (1,000 feet x 2 sides) + (1,089 feet x 2 sides) = 4,178 feet.
34. A corporation holds title in the name of its a. charter. b. board of directors. c. shareholders. d. creditors.
34. a. A corporation is an artificial person and holds title in the name of its charter.
24. While the doctrine of caveat emptor still exists in most states, many are requiring that the seller make written disclosure of latent defects within a property and to disclose known problems. The best assurance for the agent to avoid charges of misrepresentation about the property is to recommend a. an engineer's report issued by a relative of the seller. b. a property inspection by a qualified home inspector. c. a walk-through by another agent. d. an inspection by the buyer.
24. b. A home inspection by a certified inspector, supported by a home warranty, is the best assurance that the agent will not be accused of concealing mechanical or physical problems in the property.
24. The house on Summit Street is up for sale because last year a suicide took place in an upstairs bedroom. In real estate circles the house is now considered a. latently defective. b. environmentally unsound. c. functionally obsolescent. d. stigmatized.
24. d. State laws and court decisions vary on whether potential buyers are entitled to notification of past murders, suicides, and other "stigmas."
25. All of the following provisions will be found in recently enacted residential landlord/ tenant laws EXCEPT a. statutory procedures for collecting back rent. b. statutory procedures for evicting a tenant. c. defining a leasehold as a recordable real property belonging to the tenant. d. that the landlord must supply a fit and habitable premise.
25. c. Common law and contract tenancy rights typically do not define a leasehold as a recordable real property belonging to the tenant.
25. When describing the particulars about a property, the agent does not disclose that a capital improvement project has been approved that will result in a special assessment to the owner in the near future. The broker has a. acted in accordance with the duties of a fiduciary. b. refrained from disclosing anything which would weaken the principal's bargaining position. c. committed a fraud. d. prevented future legal problems for the seller client.
25. c. Regardless of an agency relationship, the agent must disclose all pertinent facts about a property or be charged with committing a fraud. The seller has the same obligation.
25. Property taxes are paid annually in November for the calendar year. The closing is held on August 15, and the property taxes of $3,250 are prorated to date of closing.What entries are made on the settlement statement? a. Charge seller and credit buyer $677.08. b. Charge buyer and credit seller $1,218.75. c. Charge seller and credit buyer $2,031.00. d. Charge buyer and credit seller $677.08.
25. c. The seller owes 7.5 months of property taxes: $3,250 / 12 = $270.80; $270.80 x 7.5 = $2,031.00.
26. The task of the appraiser is to a. establish market price. b. guess at the final contract price. c. estimate market value. d. evaluate the property for tax purposes.
26. c. An appraisal is an estimate of market value through an analysis of data.
26. When negative amortization occurs, the a. monthly payment increases. b. term of the loan increases c. loan balance increases. d. term of the loan decreases.
26. c. In a negative amortized loan, the payments do not cover the principle amount of the loan, thereby increasing the balance of the loan after each payment.
26. How many square feet are in a half-acre parcel? a. 43,560 b. 2,780 c. 20,001 d. 21,780
26. d. An acre (43,560 sq. ft.) ÷ 2 = 21,780 sq. ft.
640 acres
2640'x2640'
27. All of the following are examples of a general lien EXCEPT a. a mortgage lien. b. federal income tax. c. state income tax. d. judgment.
27. a. A mortgage lien is an example of a specific lien.
27. Chris Salvano is the broker hired to sell Erin Miller's house. Chris shows the house to the Martins, who want to make an offer on it. At this point, what duty does Chris legally owe to the Martins? a. confidentiality and fairness b. fairness and honesty c. exclusivity d. those of a fiduciary
27. b. As customers, the Martins are entitled merely to fair and honest treatment. Chris is not acting in a fiduciary capacity.
27. A property manager should not consider which of the following when selecting a tenant? a. the tenant's ability to pay b. space requirements of the tenant c. compatibility of the tenant's business with other tenants' businesses d. the gender of the tenant
27. d. Under the Fair Housing Act the federal law prohibits discrimination in housing based on gender.
28. Within the agency agreement is a statement that binds the buyer to paying the broker's fee if, within a stated number of days, the buyer purchases a property that was shown to the buyer during the agency period. This clause is the called the a. limited coverage clause. b. broker protection clause. c. buyer liability clause. d. automatic extension clause.
28. b. Unless the buyer subsequently hires another buyer agent and purchases this property, the broker protection clause obligates the buyer to pay the broker's fee.
28. You are a licensed real estate agent and a realtor, meaning that you are bound to a higher standard of ethics than a non-realtor. You find a conflict between the National Association of Realtors code of ethics and state law. You should a. follow the code of ethics so as not to be charged with an ethics violation. b. ignore the state law because it is unethical. c. follow the state law even though it is unethical. d. contact the National Association of Realtors and inform them that they must change the code of ethics because part of it is illegal in your state.
28. c. In the event of a conflict, and there are some, always follow the state law.
28. Paul and John Mitchell are brothers who own a chain of auto shops. Paul Mitchell is also a real estate broker, and he's been authorized to find a buyer for their business. Paul has a. an ostensible agency. b. a designated agency. c. an agency by ratification. d. an agency coupled with an interest.
28. d. Paul is not only an agent, but also has an interest (part ownership) in the property, and should disclose this to potential buyers.
29. In a real estate transaction, a broker does not affirmatively represent either the buyer or the seller as agent. He is acting as a. a transaction broker. b. an undisclosed dual agent. c. a non-representing dual agent. d. an illegal real estate licensee.
29. a. If a broker is handling both sides of a transaction, he may do so only as a transaction broker or by disclosing a "No Brokerage" relationship.
29. Regarding the landlord's duties under a residential lease agreement, current legal thinking holds that a. only written agreements may be pursued in court. b. the tenant is obligated to keep the premises in good repair. c. the owner is obligated to keep the premises in good repair. d. the owner is obligated to repair only those items required by law.
29. d. Current legal thinking with regard to owner's obligations under a residential rental contract holds that the owner is obligated to repair only those items required by law.
29. Depreciation is I. a loss of value due to any cause. II. subtracted from the reproduction cost of the building. III. not a deduction to land. a. II only b. I and II only c. II and III only d. I, II, and III
29. d. Depreciation is a loss of value for any reason and is applicable only to the improvements.
How long must you keep copies of transaction papers:
3 years
3. All the salespersons in Al's brokerage firm work as independent contractors. Their office most likely provides them with which of the following? a. access to the MLS b. health insurance c. income tax withholding d. paid vacations
3. a. An independent contractor can receive nothing that resembles an employee benefit.
3. The Franks receive two offers on their condo, which is listed for $140,000. Anne Hill offers to pay $138,000 cash for the unit. Bob Stone offers $141,000, putting 20% down, if the Franks will pay three points to Stone's lender for the mortgage loan the buyers need.What is the difference between the two offers? a. $384 b. $3,000 c. $2,000 d. $1,128
3. a. Bob will get a mortgage for $112,800 ($141,000 × 80%). Three points will cost $3,384 ($112,800 × 0.03). The Franks will end up with $141,000 less $3,384, or $137,616. This is $384 less than Anne Hill's all cash offer ($138,000 - $137,616).
3. The approach to value that considers depreciation is the a. cost approach. b. sales comparison approach. c. income approach. d. gross rent multiplier approach.
3. a. In the cost approach, the property's depreciated value is estimated.
How long does the Broker have to remove commission from trust account?
30 Days or commingling
How long to notify GREC of new account?
30 Days or commingling
30. A life estate a. is a type of leasehold estate. b. is limited in duration to lifetime of its owner. c. cannot pass to future owners. d. is an estate in land.
30. b. A life estate is an interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
30. A land contract or installment contract is best described as a. a contract to mortgage land. b. when the deed to the property is passed and then the buyer makes regular installment payments. c. when the buyer makes regular installment payments while the seller retains title. d. a type of contract to buy land only.
30. c. Under a typical installment contract or land contract, the seller retains legal title.
30. Depreciation is classified as curable if it can be a. lived with. b. recovered. c. deducted on an income tax return. d.fixed economically.
30. d. Curable depreciation can be remedied at reasonable cost.
31. The right that a power company acquires in order to lay a service line across a customer's property is called a. an easement in gross. b. a license. c. a condemnation. d. a restrictive covenant.
31. a. If a power company wants to lay a service line across customer properties and has to acquire an irrevocable right to do so, that right would be called an easement in gross.
31. Tenancy by the entirety differs from other forms of co-ownership in that a. neither owner can force a sale. b. each owner is free to devise his or her share to chosen heirs. c. shares may be acquired at different times. d. the property must be a principal residence.
31. a. When a married couple buys any real estate as tenants by the entirety, neither can obtain a court order for partition.
31. Removal of encumbrances in order to provide free and clear title is the responsibility of a. the title company. b. the broker. c. the seller. d. the buyer.
31. c. It is the seller's responsibility to deliver title to buyer free and clear of any encumbrances.
32. Joanna Bruno bought a house for $120,000, putting 20% down and borrowing the rest with a conventional loan. At the end of the first year, her principal had been paid down by $480 and property values in the area had risen by 6%. Her equity at the end of that first year was a. $7,200. b. $24,480. c. $31,680. d. $95,520.
32. c. Her equity is the present market value of her home, minus the amount of debt remaining on it. Present market value is $127,200 ($120,000 x 106%). Remaining debt is $95,520 ($120,000 x 80%, reduced by $480). Thus, her present equity is $31,680 ($127,200 - $95,520).
32. To determine an encroachment, the purchaser should obtain a. a title search. b. title insurance. c. a survey. d. a current opinion from an attorney.
32. c. Only a survey will show an encroachment.
32. Reconciliation is a. used to determine reproduction cost of a building. b. loss of value. c. an element of value. d. analyzing the three estimates of value in the appraisal process to arrive at an estimate of market value for the property.
32. d. Reconciliation is the art of analyzing and effectively weighing the findings from the three approaches to value.
33. The seller of a house built before 1978 is required by law to furnish the buyer with a a. good-faith estimate of settlement costs. b. lead-paint information booklet. c. reduction certificate. d. proof of flood insurance.
33. b. Tenants must receive lead-paint information before a lease is signed if the house was built before 1978.
33. Which of the following sources provides the most money to the borrower for residential property purchases? a. credit unions b. mortgage companies c. Government National Mortgage Association (GNMA) d.Federal Housing Authority (FHA)
33. b. The great majority of funds for residential loans are provided by mortgage companies. Since they sell the loans they originate, they have virtually unlimited funds.
33. A valid lease, in writing and witnessed by two people, is a. a contract. b. an interest in real property. c. both a and b. d. neither a nor b.
33. c. A valid lease is both a contract and an interest in real property.
34. A metes and bounds survey begins at the point of beginning and ends at the a. point of beginning. b. end point. c. monument. d. last benchmark.
34. a. A metes and bounds survey begins at the point of beginning and ends at the point of beginning in order to describe the entire tract.
34. Soil that builds up gradually along a river bank is called a. peat. b. avulsion. c. alluvion. d. sod.
34. c. Alluvion (or alluvium) is the soil that is deposited by the action of a flowing stream.
35. The person who receives real property through a will is known as a a. devisee. b. testator. c. vendee. d. legatee.
35. a. The transfer of real property through a will is known as a devise.
35. An odorless substance created by decaying radioactive materials in the soil is known as a. urea formaldehyde. b. radon gas. c. carbon monoxide. d. polychlorinated biphenyl.
35. b. Radon gas is a naturally occurring gas that may cause deadly health hazards in high concentrations inside a structure.
35. As the buyer's agent, your client is a person from China, who is moving to the United States to run a Chinese import business. You only show them properties where it is obvious that the majority of residents are of Chinese ancestry. Have you violated any Fair Housing Laws? a. No, as the buyer's agent you're responsible to see that the buyer will be happy where they buy. b.Yes, this is an example of steering. c. No, even though the buyer never stated it, you felt he would be more comfortable in a Chinese community. d.Yes, this is an example of blockbusting.
35. b. The agent's job is to show his client homes within their housing needs and ability to pay. Unless the client asks for a specific area, the agent should show representative homes in all areas that meets the client's needs and price range. The client should then decide on the area they want to live, not the agent.
1 yard
36 inches
each township contains
36 sq miles
36. When a leased property is sold, the lease a. has to be renewed. b. is binding on the new owner. c. creates a tenancy for month to month. d. is considered void.
36. b. A lease is valid for the entire term and is binding on future owners.
36. The duties of the property manager include all of the following EXCEPT a. maintaining the property while preserving finances. b. marketing for a constant tenant base. c. seeking interested buyers. d. preparing budgets.
36. c. The property manager typically is not involved in selling the property.
36. A zoning commission may grant a variance to property use when which of the following exists? a. over-budget development costs to a subdivider b. environmental concerns as to use c. alternative building sites that increase owner's costs d. limitation of feasible building sites due to land contours
36. d. A variance is a change in zoning requirements to lessen restrictions when building site hardships occur, such as limited building sites.
37. A lender has agreed to provide a loan on the following terms: 90% LTV for the first $50,000 of appraised value; 95% LTV of the second $50,000 of appraised value and 97% of the remaining amount. If the property appraised for $140,000, how much will the lender's loan be? a. $131,600 b. $131,300 c. $134,400 d. $130,000
37. b. To determine the amount of the loan, multiply the level amount times its percent. Get the loan amount for that level and then add the level loan amounts together to get the total loan amount. $50,000 × .90 = $45,000 $50,000 × .95 = $47,500 $40,000 × .97 = $38,800 Total: $131,300
37. For there to be a valid right to purchase or terminate, an option contract must contain a. notice to terminate. b. at least seven days to back out of the agreement. c. dollar consideration. d. a right of recission.
37. c. The lack of dollar consideration may invalidate an option. The courts want "something at risk" for the right to purchase/ terminate at a later time.
37. Transfer of title requires a. the delivery and presence of grantee. b. the acceptance and presence of grantee. c. the delivery from the grantor. d. both delivery and acceptance of the deed.
37. d. Ownership is not considered transferred until the deed is actually delivered and accepted by the grantee.
38. Which form or action of discrimination was NOT in violation of the Federal Fair Housing Act when established in 1968? a. gender b. religion c. color d. national origin
38. a. Discrimination based on a person's gender was added to Fair Housing Laws through the Housing and Community Development Act of 1974.
38. If a person dies leaving no will and no natural heirs, his or her property passes to a. local charities. b. the state. c. the Internal Revenue Service. d. the Department of Housing and Urban Development.
38. b. The state becomes owner of a deceased person's property in the absence of a will or natural heirs, through the power of escheat.
38. The obligation of protecting any deposits entrusted to an agent is an example of the fiduciary duty of a. competence. b. disclosure. c. accounting. d. obedience.
38. c. The agent must be able to account for and produce anything of value entrusted to their care. This includes advances of marketing fees, earnest money deposits, and escrows.
39. If a seller's agent shares his commission with a buyer's agent a. this is not necessarily an indication of agency representation. b. the seller's agent may advise the seller of this cooperation. c. the buyer's agent does not have to disclose this to the buyer. d. the seller agent may deduct that amount from the total he pays his agent.
39. a. The mere payment of a fee does not indicate an agency relationship.
39. Sue Addison owns an apartment building that was constructed in 1965. According to federal law, which of the following must be attached to the leases Sue prepares for prospective tenants? a. a report of the building's radon level b. a lead-based paint disclosure statement c. an illustration of the building's location relative to electromagnetic fields (EMFs) d.any known instances of groundwater contamination in the building's water supply
39. b. Federal law requires that a lead-paint disclosure form be given to all tenants and buyers if the building was constructed before 1978.
39. Failure to comply with Fair Housing Laws is a. a civil violation. b. a criminal violation. c. grounds for disciplinary action against the licensee. d. all of the above
39. d. If you fail to comply with fair-housing laws, it is considered both a criminal and a civil violation and is grounds for disciplinary action against the licensee.
4. A building permit may be issued without question even if the proposed structure violates existing a. zoning laws. b. deed restrictions. c. building codes. d. setback requirements.
4. b. Deed restrictions are private and nongovernmental, set by previous owners of the property. They are enforced through neighbors' lawsuits, not by local building authorities.
4. The management agreement does all of the following EXCEPT a. identify the parties. b. authorize the manager to make personal deals resulting in outside compensation by suppliers. c. describe the manager's responsibilities and authorities. d. state the owner's overall goals for the property.
4. b. The manager must avoid conflicts of interest by refusing to accept gratuities from suppliers.
4. Salesperson Pelke has just returned from a closing. The property sold for $150,000 and the commission was 6% of selling price. The company offers a 50/50 split between the listing and selling side. Salesperson Pelke is on a 70/30 with his company. As the selling agent, how much commission will Pelke receive? a. $6,300 b. $2,250 c. $3,150 d. $4,500
4. c. Agent Pelke gets 70% of the company's dollar and the company receives 3% of the sale price for their commission; $150,000 × .03 = $4,500 × .70 = $3,150.
160 rods
40 chains
Assessment rate in GA is:
40%
GA TAX ASSESSMENT
40% OF MARKET VALUE
40. A property is sold for $75,600 in cash. If transfer taxes are $.55 per $300 of value, how much transfer tax is due? a. $138.60 b. $1,384.20 c. $1,525.00 d. $152.50
40. a. $75,600 ÷ $300 = $252; $252 × $.55 = $138.60.
40. A contingency in a purchase contract is a. something that must happen before the buyer can be required to complete the purchase. b. a listing of personal property that is to be left by the seller. c. a statement making time of the essence in the performance of the contract. d. the seller's promise to prove clear title to the buyer's satisfaction.
40. a. The most common contingencies are for the buyer's securing the necessary financing, the sale of the buyer's present home,and the buyer's approval of a home inspector's report.
40. The form of ownership that would give an investor the greatest flexibility when selling his or her interest would be a. a general partnership. b. ownership in severalty. c. joint tenancy. d. a limited partnership.
40. b. Ownership in severalty, that is, severed from anyone else's interest, would give the individual owner complete freedom to dispose of the property.
41. A property manager's compensation may be based on any of the following EXCEPT a. finder's fees from suppliers of goods and services. b. a flat fee. c. a percentage of gross income. d. a fee per unit.
41. a. A property manager may not solicit or accept gratuities from suppliers of goods or services.
41. If the buyer's agent splits his commission 50/50 with his broker, and the seller's agent receives 60% of his broker's 50% share, how much does the buyer's broker receive if the listing broker's fee is 6% of the $125,000 sales price of the house? a. $3,450 b. $3,750 c. $1,875 d. $7,500
41. b. Convert 6% to a decimal and multiply; $125,000 × .06 = $7,500 total commission on sales price. Convert 50% to a decimal and multiply; $7,500 × .50 = $3,750 total buyer's broker share.
41. The most accurate way to uniquely locate and bound a parcel of real property is to use a. a topographical map. b. latitude and longitude bearings. c. the assessor parcel number. d. a metes and bounds survey.
41. d. A metes and bounds survey is the most accurate way to uniquely locate and bound a parcel of real property.
42. Jerry Wright, the owner of a commercial building, estimates the depreciation of the physical plant at $15,000, the furniture and fixtures at $8,000, and the machinery at $7,500. If he is in the 40% bracket, his tax savings would be a. $12,200. b. $30,500. c. $18,300. d. $1,220.
42. a. The owner would save 40% of the total depreciation. ($15,000 + $8,000 + $7,500) × 0.40 = $12,200.
42. Jerry Wright, the owner of a commercial building, estimates the depreciation of the physical plant at $15,000, the furniture and fixtures at $8,000, and the machinery at $7,500. If he is in the 40% bracket, his tax savings would be a. $12,200. b. $30,500. c. $18,300. d. $1,220.
42. a. The owner would save 40% of the total depreciation; ($15,000 + $8,000 + $7,500) x 0.40 = $12,200.
42. Which of the following deeds provides the purchaser with the least protection in regards to covenants and/or warranties given by the seller? a. trustee's b. special warranty c. general warranty d. quitclaim
42. d. A quitclaim deed grants no covenants or warranties from the seller to the buyer. If the seller has no ownership rights, then the buyer will not acquire any title, also the buyer will not have any claim against the seller.
43. A residential property was built 75 years ago. Two of the five bedrooms have no closets, the basement floor is unpaved, and the original slate roof needs repairs. To the appraiser, the most important consideration is a. the sale price of a nearby similar property. b. how much it would cost to finish the basement floor. c. how the bedrooms could be reconfigured to provide some storage. d. the life expectancy of the roof.
43. a. In appraising residential real estate, the subject property is compared with similar properties that have sold recently.
43. When money is escrowed each month to cover annual payments of insurance and taxes, the mortgage is called a. a blanket mortgage. b. a budget mortgage. c. a graduated payment mortgage. d. a growing equity mortgage.
43. b. A budget mortgage is a mortgage wherein the lender will escrow money from the borrower's monthly payment to pay annual taxes and insurance.
43. When an appraiser deducts depreciation using the reproduction cost of a building, the depreciation represents a. costs to modernize property. b. loss of value due to any cause. c. lack of site improvements. d. amount of accrued depreciation.
43. b. In an appraisal, depreciation is a loss of value in property due to any cause.
acre
43560 sq feet
49. In the event of default and foreclosure, which clause would require the lender to look only to the property for satisfaction of the debt? a. defeasance clause b. exculpatory clause c. cognivit clause d. subordination clause
49. b. An exculpatory clause acts as a nonrecourse loan. The buyer is not personally responsible for the note.
44. The term that describes the percentage of the appraised value of a property that a lender will finance is called a. loan-to-value ratio. b. owner's equity. c. certificate of reasonable value. d. capital investment.
44. a. The lender will divide the loan amount by the appraised value (or purchase price, whichever is lower). This is called the loan-to-value ratio. If a property is appraised at $100,000 and the lender will lend $90,000, this would be a 90% loan to value.
44. Which of the following statements is true of a tenancy in common? a.When one of the tenants dies, his interest is spread among the survivors. b.Unless another form of ownership is described in the deed, co-owners who are not spouses of each other are presumed to be tenants in common. c. Sale of one of the interests will end the tenancy in common. d. Destruction of the property terminates the co-ownership.
44. b. There is a presumption that co-owners are tenants in common unless they are married to each other, in which case the presumption is that the property is held as community property.
44. The Millers put their house on the market, the Blacks made a written purchase offer, and the Millers accepted the offer in writing. When is the contract valid? a. immediately b. as soon as the signatures are notarized c. when the Blacks are notified of the acceptance d. when it is placed in the public records
44. c. Acceptance of an offer must be communicated to the offeror.
45. Which of the following instruments would contain the loan amount, interest rate, term of the loan, and monthly payments? a. note b. mortgage c. deed d. lease
45. a. The note contains the loan amount, interest rate, term of the loan, and monthly payments.
45. Jill Adams, a property owner, just received a bill from her local taxing authority in the amount of $2,040. Property taxes in this jurisdiction are based on 80% of assessed value and the rate is $1.50 per hundred. What value has the assessor placed on Jill's property? a. $136,000 b. $170,000 c. $163,200 d. $190,000
45. b. $2,040 ÷ 1.5 × 100 ÷ 0.8 = $170,000
45. John offers $100,000 for a home listed at $120,000. The seller counteroffers at $110,000. At this point a. the original offer can still be valid. b. the owner must take the original offer if he wants to sell. c. the original offer is void. d. if the seller now chooses to take John's original offer of $110,000, John must go forward with the purchase.
45. c. Once there is a counteroffer the original offer is void.
46. All are protected classes EXCEPT a. 35-year-old men. b. national origin. c. race. d. handicap.
46. a. Protected classes include national origin, race, and handicap.
46. A tax bill computed by a cost-per-front foot is a a. personal property tax. b. special assessment. c. license. d. use permit.
46. b. Special assessments are generally for repayment to the government for the cost of installing utilities, or curbs and gutters. Each owner is billed for their share of the expense calculated by their proportion of the benefit to their property
46. Commercial banks prefer to make shortterm loans like construction loans and 90- day business loans. The reason for their preference is a. the source of their funds is primarily from CDs (Certificates of Deposit). b. the source of their funds is primarily from savings accounts. c. the source of their funds is primarily from checking accounts. d. the source of their funds is primarily from issuing bonds.
46. c. Since a bank's funds are by definition short-term, that is, from checking accounts also known as "demand deposits," the banks prefer to make shortterm loans.
47. Upon the buyer signing the sales agreement a licensee is obligated to give a copy to the a. buyer upon request. b. buyer by law. c. buyer after the seller signs. d. the lender.
47. b. Immediately upon the buyer making the offer by signing the agreement of sale, a licensed real estate agent is obligated by law to voluntarily give a copy of that agreement of sale to that buyer.
47. What is the square footage of a room measuring 20 feet by 40 feet? a. 400 sq. ft. b. 800 sq. ft. c. 200 sq. ft. d. 840 sq. ft.
47. b. Length x width totals square footage; (20 x 40 = 800).
47. Using real property as collateral to secure a loan while retaining the property is called a. mortgage. b. encumbrance. c. hypothecation. d. promissory intent.
47. c. When a borrower uses property to secure a loan while retaining the property's use and benefit, it is known as hypothecation.
48. It is said that a deed transfers title when the deed is a. signed by the grantor at closing. b. prepared by an attorney and reviewed by the purchaser. c. handed to the purchaser or his or her representative. d. delivered to and accepted by the grantee.
48. d. A deed passes title when the seller delivers an acceptable deed to the buyer or his or her representative. This transfer of title usually occurs at the real estate closing.
48. Dave Gates, a widower, died without leaving a will or other instruction. His surviving children received ownership of his real estate holdings by a. adverse possession. b. eminent domain. c. escheat. d. law of intestate succession.
48. d. Each state has a set of laws that define the distribution of real estate owned by someone who dies without leaving written instruction. If no heirs are located, the property reverts to the state.
48. Michael Brown refuses to sell his farm to the state, which needs it to complete the route for a new highway. The state may go to court and ask that his farm be condemned, allowing the state to purchase the land using its right of a. laches. b. adverse possession. c. easement by necessity. d. eminent domain.
48. d. The government's right of eminent domain is enforced through condemnation.
49. In constructing her financial report, Noel Carpenter estimates that her real estate holdings have appreciated by 18% since purchase. If the original value was $585,000, what would her balance sheet show now? a. $690,300 b. $585,000 c. $479,700 d. $526,500
49. a. The property today is valued at 118% of purchase price: $585,000 ~ 1.18 = $690,300.
49. A buyer wants to purchase a home. However, he has his present home to sell. The best way to write the contract of sale would be to a. wait until his present home sells. b. include a sale-of-existing-home contingency. c. use an option agreement. d. include an addendum.
49. b. A contingency creates an additional condition that must be satisfied before an agreement is fully enforceable.
GREC Members
5 members licensed and residence of GA for 5 years and 1 non licensed member for consumer protection
5. For appraising a 20-year-old single-family residence, the best data is the a. probable rental figure. b. recent sale prices of nearby houses. c. replacement cost. d.owner's original cost plus money spent on improvements.
5. b. How much buyers have paid for similar nearby properties is the best guide to market value.
5. For a real estate agency relationship to be enforceable, which of the following is NOT required? a. The principal has the power to do what is being assigned. b. The principal has the funds to pay the agent. c. The agent must be authorized by a written agreement. d. The agent must be a real estate licensee.
5. b. The principal cannot empower the agent to do anything the principal cannot do. There is no guarantee that the principal has the necessary funds.
one mile by one mile
5.280x5.280
50. The type of deed that provides the least protection is a. a special warranty. b. a quitclaim. c. a bargain and sale. d. a deed in trust.
50. b. A quitclaim deed is the weakest type of deed for a grantee to receive because no warranty of good title is given by the grantor.
50. If a contract for real estate is vague in its basic terms, a court would hold that it is a. binding on the offeror. b. unenforceable. c. valid against all parties. d. invalid until rewritten by an attorney.
50. b. Contracts must be in writing and contain all of the basic elements to be legally enforceable.
50. Gratuities for referring prospects to a broker are legal if paid to a a. salesperson affiliated with another firm. b. relative of the buyer. c. licensed broker. d. federal employee.
50. c. Referral fees may only be paid to licensed brokers.
51. When the Franks bought their first home, some of their costs included payment of points, establishment of an escrow account, premium for title insurance, and commission to their own buyers' agent. On that year's income tax return they may deduct the a. points. b. title insurance. c. commission. d. escrowed amount.
51. a. Points paid for a purchase money mortgage on onefs own home are immediately deductible as prepaid interest.
51. Which of the following is not a participant in the secondary mortgage market? a. Fannie Mae b. RESPA c. Ginnie Mae d.FHLMC
51. b. RESPA, the Real Estate Settlement Procedures Act, requires certain information be disclosed and documented for residential loans.
51. Market data approach appraising may require adjustments of sold comparables by an appraiser for all of the following EXCEPT a. sale date of comparable. b. replacement cost of structure. c. financing made available by seller. d. lot size and location.
51. b. Sales date, seller financing, lot size, and location of a property are adjustments to sold comparables an appraiser must consider in determining market value of an object property. Replacement cost of a structure is used to determine value in a cost approach appraisal.
52. Samantha Mulder goes to a bank and borrows money for the purchase of her first home, thereby becoming a a. mortgagor. b. mortgagee. c. lienor. d. lienee.
52. a. The borrower mortgages the property, giving the lender a claim against the real estate. As the one who does the mortgaging, she is the mortgagor.
52. By mistake of the general contractor, a new building was constructed so that it extends over the property line onto an adjacent lot owned by another individual.Which of the following is NOT true in this situation? a. The owner of the new building has created an encroachment. b. The adjacent owner may bring legal action to require that the new building be reconstructed to remove the offending portion. c. The owner of the new building may acquire authority to maintain the building through their right to an easement by necessity. d.Title may be considered unmarketable unless the encroachment is removed or otherwise dealt with.
52. c. An easement by necessity requires that crossing adjacent property is the only way to access another property.
52. Significant provisions of the Real Estate Settlement Procedures Act include all of the following EXCEPT a. the lender's estimate of settlement costs. b. a uniform settlement statement. c. a settlement location. d. the disclosure of controlled business.
52. c. The Real Estate Settlement Procedures Act does not require a specific settlement location.
1 Acre
53,640 square ft
53. A homebuyer may obtain a $35,000 mortgage loan provided that the seller pays a discount of 3 points.What is the amount of the discount? a. $1,150 b. $1,050 c. $10,500 d. $1,510
53. b. 3 points = 3%, or .03. The amount of the discount = x. The points = .03, and the amount of the loan is $35,000. So, x = (.03)(35,000); x = $1,050.
53. A salesperson is about to change firms. Should he contact all of his buyer clients and advise them that he will still represent them at his new firm? a. Yes, because a listing is a personal service agreement and stays with the salesperson. b.No, because the listing is with the broker. c. Yes, because the salesperson is the one the client looks to for representation. d.No, because a listing cannot be terminated by a buyer.
53. b. Listings are with the broker, not the salesperson. Unless a contractual agreement exists to the contrary, the salesperson may not interfere with any legal relationship the broker may have with a client.
53. Express covenants that protect the grantee are found in a a. quitclaim deed. b. bargain and sale deed. c. sheriff 's deed. d. general warranty deed.
53. d. A general warranty deed contains covenants that warrant the new owner's undisturbed and clear title.
54. An accrued charge on a closing statement is paid a. in advance. b. in arrears. c. always by buyer. d. always by seller.
54. b. Accrued means owed but not paid, therefore an account is paid after charges were made, such as real estate property taxes or credit cards.
54. Lenders across the country are likely to offer a certain type of mortgage plan after an announcement that such mortgages with certain specifications will be purchased by a. the Office of Thrift Supervision. b. the Federal Deposit Insurance Corporation. c. Fannie Mae. d.HUD.
54. c. Fannie Mae buys large packages of mortgages that meet its particular specifications and has great influence on the primary mortgage market.
54. An elderly property owner dies testate. In the will, care of the family pet is assured by conveying ownership in the property to a grandson who may occupy and enjoy the property so long as the pet lives. Upon the death of the pet, ownership passes to a designated charity.Which of the following is true in this situation? a. The charity acquired legal title on the elderly property owner's death. b. The son may replace the pet with another of the same breed. c. The estate is one of a life tenancy pur autre vie. d. The son has a fee interest.
54. d. An interest that exists "so long as" a condition is met is a fee simple with a special limitation.
55. What is the square footage of a living room measuring 30 feet by 23 feet? a. 960 b. 690 c. 609 d.906
55. b. Square footage is calculated as length times width. (30 × 23 = 690)
55. What is the indicated value of a home if the others in the neighborhood sold recently for between $160,000 and $167,000, and the subject house has a pool (valued at $8,000 by the appraiser) that the others do not have? a. $168,000 b. $175,000 c. between $168,000 and $175,000 d.between $160,000 and $175,000
55. c. If the value of the pool is $8,000, the adjustment is a direct addition to the range of the current sales in the neighborhood which did not have pools.
55. All of the following are true about a settlement statement EXCEPT a. the statement is to determine the net amount due to the seller. b. the statement determines the cash required of the buyer. c. the statement is signed by both parties to evidence approval. d. the statement is signed by the lender only.
55. d. Although the lender may witness the signatures, both buyer and seller must sign the closing statement.
56. A representative with full authority to bind the principal to all agreements is a. a general agent. b. a literary agent. c. a special agent. d. an accidental agent.
56. a. A general agent has the power to act for most purposes on behalf of the principal.
56. What did the 1972 amendment add to the Federal Fair Housing Act of 1968? a. qualifications as to the age of children in certain housing facilities b. landlords making reasonable property alterations for handicapped tenants c. operation of an adults only apartment complex d. display of equal housing poster in broker's place of business
56. d. In making the public more aware of federal Fair Housing Laws, Congress requires all brokers to display the HUD Equal Housing Poster in their place of business.
56. Which approach to value is best when appraising a six-unit apartment building? a. the sales approach to value b. the replacement cost c. the reproduction cost d. the income approach to value
56. d. The income approach to value is used for valuation of income-producing properties.
57. A property manager must have which type of contract with the owner? a. a listing agreement b. a management agreement c. a lease agreement d.a multi-peril agreement
57. b. A management agreement is between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority.
57. A cap rate is used in what type of appraisal? a. reproduction b. income approach c. tax assessment d. competitive market analysis
57. b. The capitalization rate is an analysis of how much investors are willing to spend in a certain neighborhood in return for a certain amount of income.
57. A buyer contracts for a property and negotiates a purchase price of $250,000.With a 20% down payment, he has no problem obtaining a 30-year conventional loan for the balance. At 8%, full amortization requires for a monthly payment $7.34 per thousand. If the lender adds another $250 per month for escrow, what will the buyer pay each month? a. $1,835.00 b. $1,468.00 c. $2,085.00 d. $1,718.00
57. d. ($250,000 x 0.8) / 1,000 = $200; multiply by 7.34 to get $1,468. Add $250 escrow to get $1,718 monthly payment.
58. The vendee has a. equitable title in the property. b. an obligation to sell the property. c. temporary title to the property. d. no obligation to the seller.
58. a. Equitable title is an interest in acquiring legal title. Legal title will not be obtained until the buyer has actually purchased the property.
58. The appraised value of a property is $325,000, assessed at 90% of its appraisal. If the tax rate is $2.90 per thousand of assessment, how much are the taxes for the first half of the year? a. $471.25 b. $424.13 c. $942.50 d. $848.25
58. b. $325,000 x 9% x 0.5 (half-year) = $424.13
58. Property managers often make management decisions about tenant selection and budgets for their clients. In these relationships, the property manager is acting as a(n) a. special agent. b. power of attorney. c. independent contractor. d. general agent.
58. d. The general agent is empowered to make binding decisions on behalf of the principal. Approving leases and property expenditures are among those activities.
59. The best way to define market price is a. the actual selling price of a property. b. the most probable price a property should bring in a fair sale. c. the price represents normal consideration for the property. d. the price is not affected by unusual circumstances.
59. a. Market price is what a property actually sells for.its sales price.
59. A house was purchased 5 years ago for $90,000. The area has generally appreciated at an annual rate of 2%. How much should the house sell for now? a. $81,000 b. $99,000 c. $95,000 d. $100,000
59. b. 5 years × 2% per year = 10% appreciation (straight line); 100% + 10% = 110% property is now worth relative to original purchase price; $90,000 × 110% = $99,000 current value.
59. Under the Truth-in-Lending Act, lenders are required to provide borrowers with a statement disclosing the essential costs involved with borrowing. If your clients are buying a new-build, which item will not be disclosed to them? a. the interest rate b. the term c. the monthly payment d. the developer's buy-down
59. d. Buy-down is a financial arrangement whereby money is paid up-front to a lender in order to reduce the rate of interest for the borrower. A developer's buydown is an agreement between the developer and the lender, not the borrower and the lender.
6. The provisions of the Real Estate Settlement Procedures Act (RESPA) apply to a. one- to four-family residential mortgage loans. b. all residential mortgage loans. c. all mortgages except home equity loans. d. installment contracts.
6. a. RESPA covers federally related one- to four-family mortgage loans, including equity loans.
6. Elderly homeowners can sometimes tap the equity in their home without having to make monthly payments by using a a. wraparound mortgage. b. reverse mortgage. c. conversion option. d. blanket mortgage.
6. b. With a reverse mortgage, the homeowner receives a lump sum or monthly checks, and no repayment is made until the property is sold or the owner dies.
6. A borrower can expect to pay a mortgage insurance premium (MIP) for a. an 80% LTV conventional loan. b. a VA loan. c. a graduated payment loan. d. an FHA 203(b) loan.
6. d. The premium paid to purchase mortgage insurance provided by FHA is referred to as MIP or mortgage insurance premium.
60. The Sherman Anti-Trust Act prohibits real estate brokers from a. selling each other's listings. b. agreeing to set standard commission rates. c. advertising the amount of down payment needed on a property. d. discriminating on the basis of race or religion.
60. b. In the past, brokers have suffered large fines for conspiring to set commission rates beyond their own offices.
60. An appraiser estimates annual rental collections on an investment property of $99,000. The vacancy factor is 5% and operating expenses run 30% of gross income. A similar investment should generate a return on investment of 15%. Using the income approach to value, what is the market value of this property? a. $462,000 b. $627,000 c. $429,000 d. $660,000
60. c. The formula for the income approach is NOI divided by cap rate = value. $99,000 × 0.95 = $94,050 net income; $99,000 × 0.3 = $29,700 operating expense; $94,050 - $29,700 = $64,350 NOI; $64,350 ÷ 0.15 = $429,000.
60. Which is NOT an example of a buyer's agency agreement? a. an exclusive buyer agency b. an open buyers' agency c. an exclusive-agency buyer agency d. a net buyer agency
60. d. There are three basic types of buyer agency agreements: exclusive buyer agency, open buyersf agency, and exclusive-agency buyer agency.
61. One advantage of condominium ownership over cooperative ownership is that a. condominium owners pay no maintenance fees. b. condominium owners can mortgage their units individually. c. cooperative owners have no choice in which unit they occupy. d. there is basically no difference in the two forms of ownership.
61. b. Condominium owners can borrow money by pledging their individual unit giving them the opportunity to structure the financing to suit their individual needs. Likewise, they can purchase their unit without any debt.
61. A type of lease that is common in retail properties requires the tenant to pay a portion of gross sales to the landlord. This is commonly referred to as a a. net lease. b. sales lease. c. percentage lease. d. gross lease.
61. c. A percentage lease has a base rent plus a percentage (overage) of the gross sales after the retailer goes over a predetermined threshold in sales.
63. Failure to act timely to have a court enforce deed restrictions may result in the violations being allowed because of the legal concept called a. non-conforming use. b. laches. c. constructive notice. d. injunction.
63. b. Laches is a legal tenet to set a statute of limitations on court-ordered removal of a deed restriction violation. A property owner's failure to act timely may result in a loss of court-ordered action to correct a deed restriction violation.
63. In which appraisal approach is it necessary for the appraiser to estimate the value of the land separately? a. sales comparison approach b. cost depreciation approach c. income capitalization approach d. gross income multiplier
63. b. The cost approach requires the building and land to be valued separately
64. Mortgage insurance protects the a. borrower's family by paying off the loan in case of death. b. lending institution against loss if the loan goes into default. c. borrower in case of job loss or accident. d. veteran by allowing no-down-payment mortgage loans.
64. b. Mortgage insurance, which protects the lender from loss, should not be confused with mortgage life insurance, which pays off the loan in case of the borrower's death.
64. A landlord not offering as many properties to a family with children that were offered to a single prospect is an example of a. channeling prospects. b. redlining of marital status. c. malice before the fact. d. less favorable treatment.
64. d. Not offering as many choices to a prospect with children would be less favorable treatment based on familial status.
64. A subdivider must place in the public records a map of the property known as a a. plan. b. zone. c. plot. d. plat.
64. d. The subdivision map, which shows lots, blocks, streets, and the like, is known as a plat. It is filed in a plat book, open to the public.
1 Sq Mile
640 Acres
1 section of land
640 acres
square feet in an acre
640 sq ft in an acre
65. Mary owned fee simple title to a lot next door to a church. She gave the lot to the church as a gift. However, she wanted to make sure it would always be used for church purposes. Her attorney prepared her deed to convey ownership of the lot to the church "so long as it is used for church purposes." The church owns a a. fee simple estate. b. fee simple determinable. c. fee simple absolute. d. fee simple defeasible.
65. b. Feasible title with a special limitation is called fee simple determinable.
65. Which of the following phrases is NOT discriminatory in an advertisement to lease a non-exempt one hundred unit apartment complex under the current Federal Fair Housing Act? a. no handicapped alterations will be made b. adults only, no children c. no smoking on premises d. females only
65. c. Smoking rights are not protected under Fair Housing Laws. Landlords may enforce no smoking as a lease provision.
66. An abstract of title contains a. the summary of a title search. b. an attorney's opinion of title. c. a registrar's certificate of title. d. a quiet title lawsuit.
66. a. An abstract reports the results of a title search of the public records.
70. If a lender agrees to make a loan based on an 80% LTV, what is the amount of a loan for a property appraised for $135,000 and a sale price of $137,800? a. $110,240 b. $105,920 c. $108,000 d. $112,000
70. c. 80% LTV is based on the lesser of the appraised value or the sale price; $135,000 × .80 = $108,000.
66. A buyer offers, in writing, to pay $295,000 for a property. The buyer makes a down payment of 30% and finances the balance by obtaining a 30-year conventional loan. The factor for the PI payment is $7.34 per thousand. The lender opens an escrow account for payment of the annual property taxes of $3,000 and the property insurance premium of $600, collecting 1/12 of those amounts with the monthly payment. What is the monthly PITI payment for this borrower? a. $1,515.71 b. $1,815.71 c. $2,798.00 d. $2,498.00
66. b. $295,000 x 0.7 = $206,500 loan; 206.5 x 7.34 = $1,515.71 principal and interest; ($3,000 + $600) / 12 = $300 taxes and insurance; $1,515.71 + $300 = $1,815.71 PITI.
66. In which real estate closing must a HUD Uniform Settlement Statement be used? a. cash transaction on the sale of a single family dwelling b. commercial sale funded by a federally chartered bank c. one- to-four family home with federal related loan d. agricultural vacant land purchased with a federally backed loan
66. c. The Real Estate Settlement and Procedures Act requires the use of the HUD closing statement on all federal related one- to-four family home loans.
67. A tenant paid rent of $500 due the first of the month and $500 security deposit. The property closes on September 15. How much money will the sellers owe the buyer at closing? a. $750 b. $500 c. $1,000 d. $1,500
67. a. The security deposit transfers to the new owner. $500 plus 1/2 month's rent ($250) = $750.
67. Which of the following statements concerning an easement is true? a. An easement is always appurtenant. b.An easement is an estate at sufferance. c. An easement can only be created by a deed. d.An easement appurtenant runs with the land.
67. d. An easement appurtenant runs with the land, which means that if the property is transferred the easement goes with it to the new owner.
67. Which of the following is NOT necessary in order for a property to have value? a. The property has a useful purpose. b. Somebody wants to own the property. c. The property is unique. d. The owner of the property is unknown.
67. d. Property has value only if title can be passed.
68. When a buyer makes an offer and a seller changes a few of the terms before he signs and returns it, that is a a. rejection. b. conditional acceptance. c. conditional rejection. d. counteroffer.
68. d. If an offer is changed at all, it becomes a rejection combined with a new offer. The offeree is not obligated to accept this new offer.
68. An acre contains approximately a. 5,270 square yards. b. 40,000 square feet. c. one-quarter square mile. d. 43,560 square feet.
68. d. Students should memorize the size of an acre, which some estimate at "somewhat more than 200 feet by 200 feet."
68. The broker agrees to accept as her fee any monies received above a stipulated amount. This is improper because this arrangement constitutes a. a conflict of interest. b. an option contract. c. a risky action for the broker. d. a net listing.
68. d. This scenario is known as a net listing and is prohibited in most states. This practice exposes unsophisticated owners to the potential for outrageous selling fees.
69. Which phrase in a lender advertisement to secure borrowers would be in violation of the Equal Credit Opportunity Act? a. low interest rates and fast loan approvals b. assumable note for future ease of selling c. must be under 60 years of age for 30 year term loans d. rates will be adjusted according to number of minor children
69. c. Age discrimination is protected under the Equal Credit Opportunity Act. A lender must offer all loan programs in its portfolio to any prospective borrower of legal age who applies for a loan.
69. Riparian and littoral rights belong to owners of a. a homestead. b. subsurface minerals. c. land bordering bodies of water. d. remainder and reversionary interests.
69. c. Riparian rights apply to owners of land bordering rivers and streams and littoral rights apply to those owning land on lakes and oceans.
69. When offering property for cooperation through the Multiple Listing Service, the listing broker is assuring all of the following EXCEPT that a. cooperating brokers will be compensated upon completion of the sale. b. the information in the data base is deemed to be accurate. c. the seller has the authority to sell. d.any offer will be accepted as written.
69. d. Until the seller approves an offer, it is open for consideration.
7. A property is valued at $850,000 by an appraiser and generates an annual net income of $144,500.What capitalization rate percentage did the appraiser use in determining value? a. 11.5 b. 13 c. 14.45 d.17
7. d. Capitalization rate for annual rate of return on investment is computed by dividing a property's annual net income by the property value. This math problem is solved by dividing $144,500 (net operating income) by $850,000 (property value) which equals a capitalization rate of 17%.
7. Which of the following statements is/are true regarding FHA? I. FHA insures loans but does not guarantee them. II. FHA has a program 203b that is for one- to four-family dwellings. III. FHA loans are funded by conventional lenders. a. I only b. I and II only c. II and III only d. I, II, and III
7. d. FHA insures loans but does not make the loans.
7. The Bakers have a gross income of $60,000.The lender wants them to spend no more than 28% of their income on their housing expenses. A house they can buy for $240,000 has $2,400 in annual property taxes. Homeowners insurance would cost about $400 a year. At today's interest rates, monthly payments would be $6.65 per $1,000 borrowed on a 30-year mortgage. What is the smallest amount they can expect to spend for a cash down payment? a. $10,334 b. $48,000 c. $52,000 d. $64,510
7. d. The Bakers' monthly gross income is $5,000 ($60,000 / 12). The lender allows them a monthly mortgage payment no higher than 28% of $5,000 = $1,400. From that $1,400, a month's property taxes must be subtracted ($2,400 / 12 = $200.00) and a monthfs homeowner insurance premium ($400 € 12 = $33.33). That leaves $1,167 to pay for the mortgage itself, principal, and interest. At $6.65 per thousand dollars, $1,167 will pay for $175.49, or $175,490 borrowed on a mortgage ($1,167 / $6.65 = $175.49). If they buy for $240,000 and borrow $175,490, the Bakers will need $64,510 as a cash down payment ($240,000 . $175,490).
70. A buyer obtained a loan of $135,000 with a 9.25% interest rate for the purchase of a home. After paying the first monthly payment of $1,111.05, the remaining balance will be a. $134,929.57. b. $133,888.95. c. $135,070.43. d. $135,000.00.
70. a. ($135,000 x 0.0925) / 12 = $1,040.63 interest; $1,111.05 - $1,040.62 = $70.43 principal; $135,000 - $70.43 = $134,929.57.
70. Ad valorem real estate tax is which type of lien? a. specific/voluntary b. general/voluntary c. specific/involuntary d. general/involuntary
70. c. An ad valorem tax lien is created by statutory property tax laws and is levied against a specific legal address. Property tax liens are involuntary, since nonpayment by a property owner will result in a tax foreclosure sale.
71. The buyer has been held to be in default on a contract of sale. If buyer and seller had not agreed on liquidated damage, the seller could do which of the following? a. Obtain a court order preventing the buyer from purchasing another property. b. Sue the buyer for compensatory damages. c. Have the buyer incarcerated. d.Require the buyer to find a substitute purchaser.
71. b. After disposing of the property, the seller may calculate losses and seek to recover compensatory damages from the defaulting buyer.
71. A broker takes a sales agreement to his seller for full price. The seller states he will not accept this agreement because the buyers are Puerto Rican. The broker should do which of the following? a. abide by the principal's directions and return the offer to the selling broker. b. explain to the owner that his refusal to sign because of the buyer's race violates federal laws. c. bring sales agreement to the seller from non-Puerto Rican buyers only. d.have the buyers purchase a different property.
71. b. The Federal Housing Act prohibits discrimination based on race.
71. Which of the following would NOT affect realty value? a. permitted uses by city zoning ordinances b. number of real estate brokers in the area c. marketable and/or indefeasible title of a property d. demand for property by qualified buyers
71. b. The number of realty brokers in a market area has no effect on property market value, since the market is sensitive to the economic theory of supply and demand. However, agency contracts that brokers have with their clients demand that the brokers obtain the best price for their clients.
72. James Kingsley has just settled on his new home. He obtained a new loan of $151,000 at 8% that requires a monthly payment of $7.34 per thousand. He also has an estimated annual property tax of $2,900 and an insurance premium of $560 per year, which he will pay in monthly deposits into escrow. What is the monthly payment for James? a. $1,108.34 b. $1,396.67 c. $1,350.00 d. $1,156.00
72. b. 151 x 7.34 = $1,108.34 (principal and interest); ($2,900 + $560) / 12 = $288.33 (taxes and insurance); $1,108.34 + $288.33 = $1,396.67 (payment).
72. If real estate property taxes are paid in arrears, what would the seller be debited on a September 14 closing with annual taxes of $2,700.00? (Use statutory method, taxes accrue from January 1 through closing date, seller responsible for day of closing.) a. $1,880 b. $1,902 c. $1,905 d. $1,913
72. c. $2,700.00 divided by 360 days equals $7.50 per day, times 254 days equals $1,905 debit to the seller. January 1 through September 14 equals 254 days (statutory method).
72. The house being appraised has no fireplace, but it does have a garage, and the appraiser estimates that a fireplace contributes $3,000 to the value of a home in that neighborhood. A nearby house that recently sold for $198,000 is similar except that it has a fireplace but no garage. The appraiser estimates that a garage contributes $12,000 to value. The adjusted sale price of the subject house is a. $213,000. b. $183,000. c. $207,000. d. $189,000.
72. c. The appraiser subtracts the value of the fireplace from the sales price of the comparable house and adds the value of the garage that is found in the subject property. $198,000 - $3,000 + $12,000 = $207,000.
73. John Fitzpatrick holds $800 in security deposits from the six tenants in his apartment building when he sells the building to Helen Baker. The tenants can expect a return of their security deposits from a. John at closing. b.Helen upon termination of the lease. c. the person who conducted the closing. d. John upon completion of the tenancy.
73. b. The new landlord is responsible for the return of the security deposits, which should have been credited to her when the sale was settled.
73. Both buyer and seller must consent to the agent's role in the transaction so that they know a. who is responsible for the commission. b. whether they need a lawyer. c. whom to ask about hidden defects. d. whether their disclosures will be held in confidence.
73. d. The question of confidential information is the main reason for all the new state laws on agency disclosure.
73. Ownership of a property by only one person is known as a. entirety. b. remainder interest. c. reversionary interest. d. severalty.
73. d. The word severalty comes from sever, and implies that all other persons are severed, or cut off, from any share of ownership.
74. An income approach appraisal would include which of the following information? a. annual net operating income generated b. sold comparables within the same market area c. replacement cost of structure and site improvements d. building value based on cost per square foot
74. a. Annual net operating income results after operating expenses are deducted from gross income. Annual net operating income divided by appraiser capitalization rate equals property value.
74. Riparian rights refers to all EXCEPT a. rivers. b. streams. c. waterways. d. oceans.
74. d. Littoral rights include oceans.
Salespersons:
75 hour course, test (75% or better), Be of honest and good character (GCIC), 18 yrs, resident of GA, 25-hour post license course within 1 year
75. Which method of foreclosure is used in a deed of trust mortgage lien? a. non-judicial power of sale b. judicial court ordered sale c. sheriff 's sale at the courthouse d. deed in lieu of accepted by lender
75. a. A deed of trust mortgage permits the trustee/fiduciary to sell the property at public auction to protect the lender's/beneficiary's lien position without a judicial court hearing.
75. The investor criterion for a home mortgage is an uninsured loan-to-value ratio of 90% of the appraisal. The sales agreement and appraisal is in the amount of $180,000. Following underwriting guidelines, the buyer qualifies for a loan of $145,000. How much of the purchase will be financed by this investor? a. $180,000 b. $145,000 c. $108,750 d. $135,000
75. b. $180,000 × 0.9 = $162,000 maximum uninsured loan, so the buyer's entire loan of $145,000 can be figured by the described investor.
75. The Simons have defaulted on their loan payments and are behind in paying the rest of their bills, so their home is being sold in a foreclosure auction. Of the many liens against it, which will have first claim on the proceeds of the sale? a. the first mortgage recorded b. unpaid real estate taxes c. mechanics lien d. home equity loan
75. b. Whether entered in the public records or not, real estate property taxes automatically take priority over all other liens.
76. A valid deed must contain a. a survey of the property. b. a legal description. c. a title report. d. the signature of the grantee.
76. b. Conveyance, description, appurtenances, premises, and habendum clauses are required in deed along with the execution and acknowledgement of the grantor.
76. A shoe store in the Town Mall pays a base rent each month plus additional rent based on the amount of business it does. It is operating under a a. ground lease. b. percentage lease. c. net lease. d. holdover lease.
76. b. The store will pay as additional rent a percentage of its receipts each month.
76. The entity that loses ownership through a deed of trust mortgage foreclosure is the a. lender. b. beneficiary. c. mortgagee. d.mortgagor.
76. d. The mortgagor (borrower) who deeds the property into trust for the mortgagee (lender) will lose ownership through foreclosure.
77. Commercial building site value is commonly quoted to a buyer by price per a. square foot. b. front foot. c. acre. d. parcel or tract.
77. a. In putting the high cost of commercial land in perspective, sellers and brokers commonly quote the price per square foot to compare property costs for buyers.
77. Adjacent properties are combined into one large tract in order to enhance the utilization and the value of the larger tract. The term used to describe this is a. severalty. b. appurtenance. c. assemblage. d. plottage.
77. c. Assemblage is bringing together two or more properties to form an aggregate whole. plottage is simply the added value that comes from combining the two parcels
77. The four unities required for the creation of a joint tenancy are a. time, title, consideration, and interest. b. competent parties, title, possession, and interest. c. time, title, legal purpose, and possession. d. time, title, possession, and interest.
77. d. The four unities required for the creation of a joint tenancy are time, title, possession, and interest.
78. After a purchase contract is accepted, the parties may later make additional agreements without changing the original document by use of a. a codicil. b. an addendum. c. a revision. d. a contingency.
78. b. Any provision later added to a contract is known as an addendum. It identifies the original contract and must be signed by all parties.
78. Prices are likely to rise when there is a a. buyer's market. b. seller's market. c. thin market. d. broad market.
78. b. In a sellerfs market, buyers are competing for the few homes on the market and are likely to offer more for them.
78. The broker's responsibility at the closing is to a. interpret the terms and conditions contained in the loan documents. b. explain the clauses found in the deed. c. review the title report for clouds or other problems. d. verify and receive the brokerage fee.
78. d. The settlement officer is responsible for all of the details of the closing. The broker is merely a witness and provides moral support.
79. A property manager should do all of the following EXCEPT a. screen prospective tenants for the HIV/AIDS virus for the protection of the other tenants. b. show available rental units to prospective tenants. c. produce the highest possible profit for the owner. d. execute leases.
79. a. People with HIV/AIDS are members of a protected class (disability) and cannot be discriminated against.
79. A buyer makes an offer to purchase a property and specifies that the owner accept or reject the offer within 48 hours. Before hearing back from the owner, the buyer locates a more attractive property and withdraws the offer. Is the buyer legally entitled to withdraw the offer? a. Yes; either party may withdraw an offer or counteroffer at any time prior to its acceptance. b.No; the offer is binding until the 48-hour time period expires. c. Yes; an offer with a condition to respond in 48 hours is not valid. d.No; the owner must be allowed an opportunity to respond to the offer.
79. a. The general rule is that any offer or counteroffer may be withdrawn at any time before notice of its acceptance has been communicated to the other party.
79. Regarding real property, which of the following statements is TRUE? a. Emblements are considered as fixtures since they are attached to the land. b.Trade fixtures attached to the building are always the landlord's property. c. Air rights can be granted separately by deed. d.Mineral rights always run with the land.
79. c. Even though air rights are considered part of the real property, they can be conveyed separately by deed.
8. George Brown owns 150 acres of farmland and has posted "No Trespassing" signs on the fence surrounding the property. He can enforce this notice by virtue of his a. constitutional privilege. b. right to exclude. c. obligation of disposition. d. surface rights.
8. b. The right to exclude is one of the rights contained in the bundle of legal rights of ownership.
8. If a property generates a negative cash flow, in order to be an attractive investment to a prospective purchaser a. there must be a substantial down payment. b. there must be a large depreciable base. c. there must be a substantial increase in property value. d. there must be little deferred maintenance.
8. c. A negative cash flow can be offset by a substantial increase in property value. Even in ownership of a personal residence where there is a negative cash flow, the house could be a good investment if it is sold at a substantial gain over the original purchase price.
8. All are true about an appraisal EXCEPT a. it is the impartial third party who prepares the appraisal. b. the appraiser's service is performed for a fee. c. the appraiser does not have an agency relationship with the party for whom the appraisal is performed. d. an appraiser determines value.
8. d. An appraiser does not determine value but rather provides an estimate of value.
80. When a property owner leases his property, at the end of the lease he has a. a reversionary interest in the property. b. a remainderman interest in the property. c. 30 days to terminate the lease. d. a possessory right to the property.
80. a. A lease is a temporary condition. Ownership remains with the owner. Revert means to "bounce back" to the owner.
80. Which of the following statements is TRUE of a land contract? a. The buyer is given the right to possess. b. The seller has a lien on the title. c. The buyer has legal title to the property. d. The seller cannot provide any of the financing.
80. a. The buyer may take possession of the property, but legal title remains with the owner until the terms of the purchase are met.
80. House A sold for $132,000. It had three bedrooms, two bathrooms, and a two-car garage. In the same neighborhood one month later, house B sold for $140,000. It had a three-car garage, but was otherwise very similar to House A. House C (the subject property) has a two-car garage.What would the appraiser adjust for the extra garage space on house B? a. $8,000 addition to the value of House A b. $8,000 deduction from the value of House A c. $8,000 addition to the value of House B d. $8,000 deduction from the value of House B
80. d. With the information given, a garage is valued at $8,000. The subject property is never adjusted. House B would receive the deduction from value in order to make it as much like the subject property as possible.
81. Office space rents for $700 per month. The tenant has a three-year lease. Your commission is 7% of the gross lease, what is your fee? a. $1,764. b. $1,674. c. $490. d. $1,470.
81. a. $700 per month × 12 (1 year) = $8,400 × 3 (3-year lease) = $25,200 × 7% = $1,764.
81. The Housing and Community Development Act of 1974 prohibits discrimination based on a. race. b. gender. c. familiar status. d. handicap.
81. b. Civil Rights Act of 1866 prohibits discrimination based on race, handicap, and familiar status. The Housing and Community Development Act of 1974 prohibits discrimination based on gender.
81. The Sinclairs needed two different loans to buy their first home. The loan that will have first claim on the value of the house in case of foreclosure is the one that was first a. negotiated. b. signed. c. recorded. d. satisfied.
81. c. Liens generally take priority from the order in which they were entered in the public records.
82. Which fee does NOT have to be disclosed in a lender's advertisement when the actual note interest rate is mentioned? a. required down payment b. appraisal fee c. number of payments over loan term d. monthly payment amount
82. b. A lender-required appraisal fee is not disclosed in advertising under Regulation Z, since it is not a component in computing loan annual percentage rate.
82. The IRS requires that an independent contractor be a. paid on the basis of successful transactions rather than hours worked. b. covered by unemployment insurance. c. strictly regulated in the matter of attendance at sales meetings. d. allowed at least two weeks of paid vacation annually.
82. b. The IRS's safe harbor guidelines for independent contractor status also require that the associate hold a real estate license and that a written contract exist.
82. Easements, encroachments, and licenses are examples of a. water rights. b. types of estates. c. encumbrances. d.government powers.
82. c. Anything such as a mortgage, tax or judgment lien, an easement, or a restriction on the use of the land is considered an encumbrance.
83. A owner who transfers real property through a will is known as the a. testator. b. legatee. c. devisee. d. beneficiary.
83. a. A person who wills his property upon death to an heir is called the testator or will maker. The legatee, devisee, and beneficiary are parties that receive property, both real and personal, through a will.
83. After the sale of the collateral property, it is determined that the net proceeds did not clear the debt. In this situation, the borrower is likely to receive a a. notice of a deficiency judgment. b. letter of defeasance. c. certificate of liability. d. notice of foreclosure.
83. a. If the foreclosure sale does not clear the debt, the borrower remains responsible for any monies due, including costs and interest.
83. When tenant Heather Grayson opened her ice cream shop in the mall, she installed counters and special freezers.When Heather closes the shop, can she remove them? a. It depends on whether her lease specifically states that she can. b.No, because as a tenant she gives up the right of possession. c. Yes, she can if she repairs any damage caused by their removal. d.No, because as fixtures they have become part of the real estate.
83. c. Trade fixtures, installed for use in a trade or business, may be removed by the tenant prior to the expiration of the lease if the premises are returned to their original condition.
84. Dennis Sorensen is buying land on which he plans to build a cabin. He wants 200 feet in road frontage and a lot 500 feet deep. If the asking price is $9,000 an acre for the land, how much will Dennis pay for his lot? a. $10,000.49 b. $20,661.15 c. $22,956.37 d. $24,104.03
84. b. The lot will measure 200' by 500', or 100,000 square feet in all (200' ~ 500'). An acre contains 43,560 square feet, so the lot contains 2.2957 acres (100,000 / 43,560). At $9,000 per acre, the total cost is $20,661.15 (2.2957 x $9,000).
84. An apartment unit rents for $500 per month the first year and $550 per month the second year. How much total rent will this tenant pay during his two-year lease? a. $16,200. b. $6,600. c. $12,600. d. $6,000.
84. c. $6,000 for first year (500 × 12); $6,600 for second year (550 × 12); That totals $12,600 for two years.
84. Which statement is true with respect to the assignment of a lease? a. The original lessee is not responsible for the payment of the rent. b. It is the same as a sublease. c. The original lessee would still retain a right to use the property for a limited time. d. The entire leasehold is transferred.
84. d. An assignment is the transfer of the entire term of the lease. A sublet is the creation of a new lease.
85. Which clause, if included in a mortgage, allows a lien recorded subsequent in time to have a superior position to the mortgage that was recorded prior in time? a. a release clause b. a subordination clause c. a cognovit clause d. a superior clause
85. b. A subordination clause allows a subsequent mortgage to be placed ahead of the existing mortgage and would generally also have an escalation clause that would increase the interest rate caused by the increased risk.
85. The legal remedy in many sales contracts which allows the non-defaulting party to force the sale is a. bilateral promises. b. earnest money. c. specific performance. d. punitive damages.
85. c. Forcing someone to perform on an agreement is a legal injunction making it mandatory that the defaulting party do what he promised to do. If he does not, he is in contempt of a court order.
85. All of the following are elements affecting the value of real estate EXCEPT a. scarcity. b. demand. c. comparability. d. utility.
85. c. Value is determined by demand, utility, scarcity, and transferability (DUST).
86. The Fair Housing Act of 1988, which addresses accessibility in new multi-family buildings for people with physical disabilities, mandates all of the following EXCEPT a. elevators or power lifts. b. doors, kitchens, and bathrooms that are wheelchair friendly. c. thermostats and lighting switches within easy reach. d. bathroom walls strong enough to support grab bars.
86. a. The law does not require elevators or power lifts in residential real estate.
86. Under Regulation Z, the right of rescission does not apply to a. home-equity loans. b. owner-occupied residential first mortgages. c. refinancing a home. d. both a and c.
86. b. The right of rescission does not apply to owner-occupied residential first mortgage loans, but it does apply to refinancing a home mortgage and to a home equity loan.
86. Which of the following approaches would an appraiser most likely use to appraise a church? a. market data approach b. cost approach c. income approach d. gross rent multiplier approach
86. b. Unique property that does not produce income is appraised by estimating reproduction or replacement cost.
87. Which is NOT an example of a buyer's debit on a closing statement? a. a loan origination fee b. a credit report c. the tenants' security deposit d. an appraisal fee
87. c. Security deposits are an example of the seller's debit.
87. A seller has $5,000 closing costs, a $93,000 loan balance, and pays 7% commission on a $125,000 sale.What are his net proceeds from the sale? a. $81,490 b. $43,510 c. $23,250 d. $18,250
87. d. $5,000 + $93,000 = $98,000 total dollar expenses of closing. Convert 7% to a decimal and multiply; $125,000 x .07 = $8,750 commission. $125,000 - $98,000 . $8,750 = $18,250 net proceeds to seller. 206,500 x (7.34 / 1,000) = $1,515.71 principal and interest; ($3,000 + $600) / 12 = $300 taxes and insurance; $1,515.71 + $300 = $1,815.71 PITI.
87. In comparing a competitive market analysis to a comparative market analysis, what is the differing factor? a. sold comparables used b. amenity differences between the comparables c. adjustments for time of sale, such as location and property condition d. properties currently for sale in the same market area
87. d. A competitive market analysis includes both sold comparables and the sales price of current properties on the market to determine value. A comparative market analysis evaluates only sold comparables in property valuation, which results in a competitive market analysis being more informative as to value of the object property.
88. Under the Equal Credit Opportunity Act (ECOA), a lender does not have to offer a loan to a a. recipient of public assistance with poor credit history. b. recipient of social security. c. recipient of food stamps. d. a 90-year-old man looking for a 30-year mortgage.
88. a. The ECOA prevents lenders from prohibiting loans based on age.
88. All of the following are physical characteristics of real estate EXCEPT a. immobility. b. scarcity. c. indestructibility. d.non-homogeneity.
88. b. Scarcity is an economic characteristic of real estate.
88. Fines for non-compliance under Regulation Z are imposed by which jurisdiction? a.municipal court b. county court c. state attorney general's office d.Federal Reserve
88. d. Regulation Z, which is part of the Truthin- Lending Act is under the supervision of the Federal Reserve, which would impose fines for non-compliance.
89. Which of the following would not be permitted under the Federal Fair Housing Act? a. The USO in Chicago renting rooms only to service personnel. b.An Arabian owner refusing to rent his home to a Jewish man. c. The owner of a 20-unit residential apartment building renting only to black men. d.An owner who lives on one side of a duplex refusing to rent to a family with children on the other side of the duplex.
89. c. The owner of more than four units cannot deny access to any member of a protected class as defined in the federal Fair Housing Laws.
89. Simon Hersch, a salesperson associated with broker Bob King, lists a house for sale for $620,000, with 5% commission due at closing. Three weeks later the owner accepts an offer for $595,000, brought in by Simon. Bob's practice is that 45% of commissions go to the brokerage and the rest to the salesperson. How much will Simon make on the sale? a. $17,050.00 b. $32,725.00 c. $16,362.50 d. $13,387.50
89. c. Total commission is $29,750.00 (5% of sale price $595,000). Simon receives $16,362.50 (55% of $29,750.00).
89. Taxes on a given property are $3,726.50 per year. Taxes for the first half 2003 have been paid. If the property closes on January 16, 2004, which of the following would be reflected on the closing statement? a. Credit buyer $2,041.92, debit seller $1,684.50. b.Credit buyer $1,684.50, debit seller $1,684.50. c. Debit buyer $1,684.50, credit seller $1,684.50. d.Credit buyer $2,041.92, debit seller $2,041.92.
89. d. 184 days in the second half of 2002 plus 16 days in January 2003 = 200 days. $3,726.50 divided by 365 multiplied by 200 = $2,041.92 credit to buyer and debit to seller.
9. Land consisting of a quarter section is sold for $1,850 per acre. The total sale price is a. $296,000. b. $592,000. c. $269,000. d. $1,850,000.
9. a. A quarter section contains 160 acres. (160 x $1,850 = $296,000).
9. An oral agreement between a lessor and lessee is legally a. a valid tenancy for years. b. unenforceable due to the statute of frauds. c. a valid tenancy at will. d. unenforceable due to the statute of limitations.
9. c. An oral lease for one year or less is enforceable and creates a tenancy at will.
9. A deed restriction is also known as a land use covenant.Which of the following is an example of a land use covenant? a. minimum square footage of homes within a subdivision b. fire safety devices within a structure c. type of fencing constructed by owner d. both a and c
9. d. Deed restrictions for land use covenants control private property use by a current owner. These covenants are used to control property use if zoning ordinances do not exist. Deed covenants can set construction standards to maintain subdivision property values.
90. Which of the following is NOT a physical characteristic of land? a. immobility b. situs c. non-homogeneity d. indestructibility
90. b. Situs is an economic characteristic of land, not a physical characteristic.
90. The words of conveyance in a deed appear in the a. heading. b. granting clause. c. alienation clause. d.purchase clause.
90. b. The granting clause of a deed contains the words of conveyance, such as "[grantor] hereby grants . . . "
90. According to the Federal Fair Housing Laws, all these practices are illegal EXCEPT a. blockbusting. b. steering. c. redlining. d. appraising.
90. d. Appraising a property is not an illegal act so long as you are not discriminating under Fair Housing Laws.
91. A salesperson has earned $120,000 in gross commissions this year. If the average commission is 2.6% per transaction, and the salesperson receives 60% of the commission from each transaction, how much sales volume has that salesperson settled this year? a. $7,200,007.69 b. $4,615,380.05 c. $7,692,307.69 d. $8,000,000.00
91. c. $120,000 ÷ 0.60 ÷ 0.026 is approximately $7,692,307.69.
91. With an amortized loan, each month a. the amount of principal and interest in each payment remains the same. b. the interest and principal payments each increase. c. the interest portion decreases and the principal portion increases. d. the interest portion increases and the principal portion decreases.
91. c. As the debt is paid down, the amount of interest due each month becomes smaller, and more of the payment is available to be applied to the principal.
91. A purchaser contracts for a new home for $250,000 and, after making a 20% down payment, applies for a 30-year fixed-rate loan at the rate of 7.5%. At the settlement on April 10, the lender collects interest up to May 1.What is the interest charge to the buyer shown on the settlement statement? a. $1,250 b. $416.60 c. $833.33 d.$875
91. d. At closing, interest on new loans is collected in advance from the day of closing until the first of the next month. No payment is due until the month following and that payment includes the 30 days just earned; (($250,000 × 0.8 × 0.075) ÷ 360) × 21 days = $875.00.
92. The purpose of RESPA is to a. help a buyer know how much money is required. b. see that a buyer and seller know all settlement costs. c. see that the borrower only knows his settlement costs. d.make sure that buyers do not borrow more than they can afford.
92. b. RESPA requires lenders to inform buyers and sellers about settlement costs prior to settlement.
92. Which of the following properties would likely merit the highest capitalization rate? a. a single-family residence b. a convenience store in an urban neighborhood c. a modern firehouse d. a strip mall with limited access to traffic
92. d. The strip mall would have the highest risk and thus bear the highest capitalization rate. The single-family residence could be appraised using the sales comparison approach.
92. Richard Morgan wants to buy Daniel Johnson's house, but Daniel doesn't want to turn over title until he receives the purchase price. They could use either a lease option or a land contract. Richard would prefer a lease option because a. it will allow him to move in immediately. b. he won't know the eventual sale price. c. Daniel will be obligated to sell to him. d. he will be free to change his mind about buying.
92. d. With a lease option, the potential buyer is free either to complete the purchase or to move out at the expiration of the lease.
93. Nell Woodhouse wants to buy a certain condo in Florida. In order to pay for the unit, the furniture, and all the appliances, she needs a a. package mortgage. b. blanket mortgage. c. wraparound mortgage. d.buydown mortgage.
93. a. A package mortgage covers both real and personal property.
93. A tenant applicant confined to a wheelchair is interested in renting a townhome. A request is made to the landlord to allow the tenant to have an access ramp constructed. Which of the following is true in this situation? a. The tenant application must be rejected. b. The landlord must allow the tenant to make the modification at the tenant's expense. c. The landlord is required to fund modifications to the property to accommodate the access problem. d. The landlord may collect an additional deposit to assure compliance.
93. b. So long as the tenant pays, there is no violation of building codes, and the tenant agrees to restore the property to its original condition, the landlord must approve the ramp.
93. Laura Murphy is buying a new home for $193,000. She makes a $40,000 down payment and finances the balance with a 7.5% 30-year conventional loan. The factor for repayment is $7.00 per thousand. After making the first payment, what is the remaining balance on Laura's loan? a. $153,135.25 b. $152,808.75 c. $152,635.25 d. $152,885.25
93. d. 153 × 7.00 = $1,071.00 PI; $153,000 × 0.075 ÷ 12 is $956.25 interest; $1,071.00 - $956.25 = $114.75 principal; $153,000 - $114.75 = $152,885.25 remaining balance.
94. Which of the following would be classified as "limited" common elements in a condominium development? a. elevators b. hallways c. assigned parking places d. limited access gates
94. c. Assigned parking spaces are limited to specific unit owners, whereas the other items are unlimited in their use and are available to all unit owners.
94. Which is not an exemption to the Federal Housing Act? a. An owner who occupies a one- to fourfamily dwelling may limit the rental of rooms or units. b.Housing may be limited for use by senior citizens if occupied by one person at least 55 years of age or older. c. a woman with three children d.Religious organizations may limit the occupancy of real estate that it owns to its own members if the units are not owned for business purposes.
94. c. The Fair Housing Amendments Act of 1988 prohibits discrimination based on familial status.
94. A property manager may legally attract prospective tenants to a building by doing all of the following EXCEPT a. offering generous concessions. b. removing troublesome tenants. c. undertaking an extensive remodeling effort. d.paying referral fees to salespersons.
94. d. It is illegal to pay referral fees to anyone except a principal broker.
95. The lender's right to call in the loan in case of default and put the secured property up for sale is based on the mortgage document's a. alienation clause. b. acceleration clause. c. defeasance clause. d. equity of redemption.
95. b. The acceleration clause allows the lender to declare the whole debt immediately due and payable in case of default.
95. An encumbrance that states a monetary interest in someone's property is called a. an encroachment. b. a deed restriction. c. an estate at sufferance. d. a lien.
95. d. A lien states that there is a monetary obligation implied by the encumbrance.
95. A broker has a principal that he turns over to a salesperson.Which of the following statements is/are true regarding the fiduciary relationship? a. The broker still has full fiduciary responsibility to the principal. b. The salesperson has a fiduciary relationship to the principal because the broker relinquished the fiduciary responsibilities when he turned the principal over to the salesperson. c. The salesperson has the same fiduciary duties to the principal as the broker. d. Both a and c.
95. d. All salespersons have the same relationship with the principal as the broker has.
96. What is the difference between MIP and PMI? a. PMI insures conventional mortgages, and MIP insures FHA loans. b. PMI is the older form of mortgage insurance. c. MIP is required only on VA mortgages. d.There is no difference; the two terms mean the same thing.
96. a. MIP (mortgage insurance premium) is charged on FHA loans; PMI (private mortgage insurance) applies to some conventional mortgages.
96. In order to appraise property valued over $1,000,000 in a federally related transaction, the person performing the appraisal would need to be a. state-certified. b. federally licensed. c. certified by the bank. d. approved by the government.
96. a. Under FIRREA, appraisers need to be certified by the state to perform an appraisal as part of a federally related transaction when the property value exceeds $1,000,000.
96. A borrower must pay $5,600 for points on a $140,000 loan. How many points is the lender charging for this loan? a. 2.5 b. 4 c. 4.5 d.5
96. b. Divide the dollar amount of the discount points by the loan amount; $5,600 ÷ $140,000 = 4.
97. What would you pay for a building producing $20,000 net income annually and showing a minimum rate of 8%? a. $50,000. b. $200,000. c. $500. d. $250,000.
97. d. $20,000 net income ÷ 8% = $250,000.
97. Nancy Tomsic's tenants all had several months remaining on their leases when she sold her six-unit apartment building to Chuck Dwight. Tenants in this situation typically a.must renegotiate their leases with the new landlord. b. can be required to leave with one month's notice. c. lose their leases when the new owner takes possession. d. need do nothing and may remain until the end of their leases.
97. d. A lease survives the sale, and the new landlord is in exactly the same position with tenants as the old one was.
97. The term "walk-through" refers to a. an appraiser's inspection of the interior of the subject property. b. empty office buildings where the vacancy rate in the community is high. c. a seller's check of the premises before an open house is held. d. the buyer's final inspection of the property to check its condition.
97. d. The sales contract should contain a provision allowing the buyer a walk-through within 24 hours before closing.
98. If a bilateral contract is signed a. either party may back out prior to closing. b. both parties are legally obligated to perform. c. the seller can be forced to perform on the agreement. d. the buyer can be forced to perform on the agreement.
98. b. A bilateral contract is one in which both parties make promises and are charged with performance of the agreement.
98. Henry Benton hires Brittany Crandall, a property manager, to lease a house that he owns. Henry is Brittany's a. customer. b. client. c. fiduciary. d. subagent.
98. b. The person who retains an agent is usually known as the client.
98. An article of personal property that is permanently attached and becomes part of the real estate is known as a. an emblement. b. an accretion. c. a chattel. d. a fixture.
98. d. Emblements are annual crops, accretion refers to land built up by soil deposits, and chattel is another word for personal property.
99. An apartment has total operating expenses of $75,000 a year and income of $750 a month for each of its 15 units. If an investor wants a 12% return on his money, what is the value of this property to him? a. $500,000 b. $550,000 c. $750,000 d. $135,000
99. a. $750 × 15 = $11,250 income per month; $11,250 × 12 = $135,000 income per year; $135,000 income - $75,000 expenses = $60,000 annual net operating income. Convert 12% to a decimal and divide; $60,000 ÷ .12 = $500,000 value to investor.
99. "Drug dealers are choosing your neighborhood to live." This statement is a form of a. blockbusting. b. steering. c. redlining. d. determining neighborhood value.
99. a. The illegal practice of attempting, for profit, to induce homeowners to sell their properties by making representations about the entry or prospective entry of persons in the protect classes into the neighborhood is called blockbusting.
99. In the reconciliation of an appraisal on a home in a large subdivision, the appraiser's decision of value would rely most on which appraisal approach? a. cost b. market data c. income d. reproduction
99. b. Market data approach appraisal reveals the current trend in market sales, which reflects parties attitudes toward real estate value.
96. A person and his property that is encumbered by a first deed of trust are in Chapter 7 bankruptcy. The: A. Court can sell the property and use the proceeds there from to pay debts owed to unsecured creditors B. Holder of the first deed can foreclose C. Debtor need not make payment on the promissory note secured by the first deed of trust D. Debtor can sell the property
: A. A Chapter 7 bankruptcy petition creates an Automatic Stay of a creditor's foreclosure against the debtor. Creditor must file a petition with the Bankruptcy Court seeking relief from the Automatic Stay and approval to institute foreclosure action. If the note is over-secured by collateral, the Bankruptcy Court trustee may sell the property, pay the secured creditor and use the excess proceeds to pay unsecured creditors. If the debtor does not make payments on the note during the Automatic Stay, the Bankruptcy trustee will pay interest to the secured creditor from the date of petition to the date of sale.
75. What document is issued when a judgment for sale of the property is made by the court: A. Writ of Execution B. Attachment C. Abstract of Judgment D. Sheriff's Deed
: A. A judgment by the court ordering the sale of property is known as Writ of Execution. An attachment holds property for court judgment. An abstract of judgment is a written decision of the court, when recorded creates a lien. A sheriff's deed is issued to the holder of a certificate of sale after the one year redemption period has passed under the terms of the mortgage foreclosure proceeding.
43. If a man has a freehold estate, which of the following would result in his having a less than freehold estate: A. Sale and lease-back B. Selling the mineral rights to a third party C. Giving a leasehold interest for 5 years D. Granting a life estate
: A. A less-than-freehold estate is a landlord/tenant arrangement. Of the choices offered, only a sale-leaseback would result in a less-than-freehold estate.
123. When duly recorded in the county where the property of the judgment debtor is located, an abstract of judgment for money awarded by a court becomes: A. An involuntary lien B. A voluntary lien C. An attachment lien D. An equitable lien
: A. A lien is a money encumbrance. In this instance, the encumbrance is placed on the property without the owner's consent and is, therefore, involuntary.
60. A subordination clause in a trust deed may: A. Give priority to liens subsequently recorded against the property B. Allow for periodic renegotiation and adjustment in the terms of the obligation C. Prohibit the trustor from making an additional loan against the property before the trust deed is paid off D. Permit the obligation to be paid off ahead of schedule
: A. A subordination clause written into a loan gives a lower (secondary) position to that loan if another loan is recorded later.
54. A new well and pump were installed on a parcel of land. For property tax assessment purposes, the county assessor would consider these as: A. Improvements B. Additions C. Part of the land D. Personal property
: A. A well and pump would be improvements to the real property.
77. A licensee who has several years of experience in the industry decided to retire from actively marketing properties. Now she helps clients choose among the various alternatives involved in purchasing, using, or investing in property. What is her profession? A. Real estate counselor B. Real estate appraiser C. Real estate educator D. Realtor
: A. Advising and guiding investors and other buyers is counseling them. Many states require a person to have a real estate license to serve as a real estate advisor/counselor for a fee, since it involves skills and duties closely related to real estate brokerage.
42. An alienation clause provides that: A. The principal amount of the loan, plus accrued interest, is due in the event of the sale of the property B. The mortgage is security for a promissory note C. A lien can be placed on the property that takes precedence over a prior recorded trust deed D. None of the above
: A. Also called Due on Sale. It states that the lender may demand the loan plus accrued interest be paid in full in the event the property is sold. The purpose of this clause is to prevent a buyer from assuming or taking title subject to an existing loan with
22. You sell a note with a face value of $12,000 for $10,000. You are: A. Discounting the note B. Amortizing the note C. Committing an act requiring a real estate license D. Committing fraud
: A. Any time you sign a note or sell a note and the amount you receive is less than the account stated on the face of the note you are 'discounting the note'.
40. Should a person be discriminated against, what would best describe the actions available to them? A. Private action in a state or federal court B. Civil action in State Superior Court C. Criminal action in a state court D. Criminal action in a federal court
: A. As discrimination is not a criminal act, we would eliminate answers "3" and "4". "2" is incorrect as the remedy available to the injured party is not limited to only action through a state court. It could take place through the federal courts.
58. Capitalization is an appraisal process used to: A. Convert net income into market value B. Establish book value C. Determine net income D. Establish a capitalization rate
: A. Capitalization of income is a method of establishing the value of income type properties.
154. Prices have risen 20%. What has happened to the value of the dollar? A. It has gone down 16 2/3 % B. It has gone down 20% C. It has gone down 25% D. None of the above
: A. For instance, an item that used to sell for $1.00 now sells for $1.20. The dollar now buys 5/6 of what it used to buy. Its value has gone down 1/6 or 16 2/3.
165. What actions can the Federal Reserve Board take to increase the supply of money and credit in the national economy: A. Lower the cash reserves required by banks which are members of the Federal Reserve Bank System B. Sell U.S. government securities in the open market C. Raise the discount rate charged banks which are members of the Federal Reserve Bank System D. Increase the requirements of banks which are members of the Federal Reserve Bank System
: A. If the Federal Reserve Board lowers the reserves required of member banks, it will increase the amount of money available in the economy.
138. Under some loans covered under the Federal Truth-in-Lending Law, the borrower has a right to rescind the loan. The right to rescind is: A. Three days B. Five days C. Ten days D. Fourteen days
: A. On loans where the personal residence is used as security (other than the first trust deed used to purchase the property), the borrower has three days to rescind.
150. The distinguishing characteristic of a real estate option when compared to a conventional contract of sale is its: A. Lack of mutuality in obligation B. Irrecovability C. Mutuality of contract D. Both "1" and "2"
: A. Only one party is bound by the contract in a real estate option: the optionee has the right to either purchase or not purchase.
102. An interest in real property can be acquired through "adverse possession" or by "prescription". The interest acquired by prescription is: A. The right to use the land of another B. An equitable title C. A legal title D. A private grant
: A. Prescription refers to an easement, which is the right to use the property of another.
193. Which of the following types of lenders would have the greatest percentage of and the most funds invested in real estate mortgages? A. Savings and Loan associations B. Commercial banks C. Life insurance companies D. Mutual savings banks
: A. Savings and loan associations place a greater percentage of their funds into real estate loans. These loans, namely, are in the single-family dwelling area. As to life insurance companies, they prefer long term, high valued commercial properties. Commercial banks, due to the liquidity requirements, prefer short term loans such as construction loans, although here too, funds are available for the home loan marker.
82. When a legal description uses only sections, townships and ranges, the lines relate to the: A. Government survey lines B. Contour lines C. Recorded tract map D. Metes and bounds descriptions
: A. Sections, townships and ranges are used in government surveys in describing the location of land. Metes and bounds description outlines a certain area.
144. Which of the following is real property: A. Stock in a mutual water company B. Fruit on trees already sold by contract C. Minerals or gas removed from the ground D. Crops before harvest
: A. Stock in a mutual water company is an appurtenance. Each share is considered to be appurtenant to a specific piece of real property and cannot be sold separately. An appurtenance is defined as real property.
151. A real estate broker only has a right to earn a commission when the property sells during the listing period except when which of the following is included in the listing agreement: A. A broker's protection clause B. A exculpatory clause C. A subordination clause D. None of the above
: A. The broker is entitled to a commission if the property is sold to parties with whom he has negotiated during the term of the listing for a stated number of days after the listing expires
104 A broker receives an offer on a property and a prospective purchaser gives him a $1,000 deposit. He places the deposit in his trust account. After all the conditions of the deposit receipt have been fulfilled, the buyer decides that he wants to back out. A. Give the $1,000 to the seller B. Give the $1,000 to the buyer C. Keep the $1,000 in his trust account D. None of the above
: A. The deposit belongs to the seller, once the conditions of the deposit receipt have been fulfilled.
97. A loan that is secured on easy terms and with a low down payment usually results in: A. Increased financing costs B. Decreased financing costs C. No difference in financing costs D. Faster amortization
: A. The lender is not going to be given easy terms or long term financing without securing something in return. This usually results in increase financing costs.
184. Examples of negotiable instruments are as follows, except a/an: A. Mortgage secure by a promissory note B. Draft C. Check D. Installment note
: A. The note is negotiable but not the mortgage
194. An addition to land resulting in the formation of a gradual build up by natural causes. The party who would benefit from this would be: A. The land owner B. The local government C. The federal government D. The landowner's neighbor
: A. The question describes accretion, and the land that accretes from a river belongs to the adjoining landowner.
173. A licensed contractor purchased eight lots in a new subdivision and constructed eight homes on the lots. He sold the eight homes to various buyers and took back a $5,000 second trust deed on each of them. He would now like to sell the trust deeds within the year of their creation at a 20%discount. In order for him to do this, he: A. Needs a real estate license B. Must sell them through a Real Property Securities Dealer C. Does not need a permit D. Must deliver a Real Property Security Statement
: A. These second trust deeds are classified as promotional notes and are real property securities. The contractor must obtain a permit to sell them and since he is handling eight in one calendar year he is considered to be in the business and must have a license to sell them through a licensee. A dealer's endorsement is not required.
121. Which of the following is not a way in which mortgages and trust deeds differ: A. Securities B. Title C. Statute of limitations D. Parties
: A. They are both security interests in property; they provide the legal right to have the property sold in the event that the borrower defaults
148. A real estate broker advertises that if a buyer buys from him or a seller lists with him he will pay the party $50 from the fee or commission he receives from the transaction. The broker: A. Can do this B. Cannot do this as it is a violation of the Business and Professional Code #10176 C. Can credit the buyer's escrow account with $50 but he could not compensate the seller D. Can give a rebate of commission to the seller, but he cannot pay the $50 to the buyer
: A. This constitutes a finders fee which may be paid to unlicensed person as long as the fee remains a finders fee. A finders fee is payable when the person has no negotiations in the transaction whatsoever -- he just tells you of the prospect. You need a real estate license if you act as an agent. There is no license required to act as a finder. A finder does not represent anyone, they merely tell a licensed agent about prospects. He does not enter into the negotiations.
38. An offer to purchase real property was signed by a prospective buyer on October 2, 1977. The terms of the offer allowed five days for acceptance by the seller. Because of an illness in the seller's family, the seller did not accept the offer until October 10, 1977. Which of the following statements is correct? A. The buyer may demand the return of his deposit B. The buyer must continue with the purchase because he did not withdraw his offer prior to acceptance C. If the buyer does not complete the purchase, the seller is entitled to the deposit D. If the buyer does not complete the purchase, the seller and the broker will each be entitled to one-half of the deposit
: A. This constitutes only an offer and one method of terminating an offer is the expiration of a specified or reasonable length of time for the acceptance to be communicated.
6. A subdivider and developer purchased considerable acreage and now plans to construct a tract of 40 homes. In arranging the financing for the new construction, the lender has agreed to advance part of the funds immediately and will release a set amount of additional money as each home is completed. The funds that will be forthcoming as construction progresses are known as: A. Obligatory advances B. Reconveyance funds C. Release monies D. Open and mortgage payments
: A. This type of construction financing is referred to as obligatory advances or fixed disbursement schedule.
56. The one unity in a joint tenancy holding that is also present in tenancy-in-common holding is: A. Equal right of possession B. Right of survivorship C. Equal interest of all owners D. Tenant in possession can be charged rent for the use of the land
: A. Under any type of ownership, each owner has an equal right of possession. This means that any owner can go anywhere on the property regardless of the percentage of their overall interest.
98. Insofar as a residential neighborhood is concerned, which of the following would offer the least protection against blighting influences on future development: A. Natural or artificial barriers B. Partially built-up neighborhood C. New neighborhood in the path of directional city growth D. All families with similar income
: B. A partially built-up neighborhood would have a definite tendency for blighting, because it was not completed and there would be a potential for vandalism.
10. A prospective client calls you and asks you to take a listing on his property. In review his papers you discover he is purchasing the property on a contract of sale that has no acceleration clause, and that has no provision in the contract prohibiting a resale or an assignment. Which of the following is the most nearly correct statement? Your client could: A. Sell his interest in the property, but only if he pays off the contract first B. Sell or assign his rights but not his duties under the original contract unless the contract seller's approval was obtained C. Property give the purchaser a warranty deed to the property providing the deed recited "subject to the existing contract of sale" D. Properly give the purchaser a grant deed to the property, providing he took back a recorded purchase money second trust deed to cover the payments due on the original contract of sale
: B. A party purchasing property under a land contract of sale may sell their interest without difficulty by assigning the contract, provided there is no prohibition on the agreement. The assignee would still be secondarily liable for some of the terms of the contract unless the seller's approval was obtained.
16. A licensed real estate broker working under a typical exclusive listing incurs several expenses. He is not entitled to be reimbursed for these expenditures, unless: A. The buyer has demanded that these expenses be incurred as a condition of continuing with the transaction B. Such expenditures were authorized by the principal C. It was necessary for him to incur the expenses in order to close the sale D. The broker was representing the best interests of the principal in consummating the sale
: B. A seller is not obligated to reimburse the expenses of the broker unless those expenses are authorized by the seller.
4. Sellers are usually reluctant to cancel an existing transferable fire insurance policy in the event of a cash sale, due to the fact that: A. The buyer may not properly cover the property B. The higher short term cancellation rate will apply C. It could result in cancellation of other policies D. The elimination of a cash return in the proration
: B. A seller on a cash sale would be reluctant to cancel an existing transferable fire insurance policy because the seller would receive a short term cancellation rate. Therefore, the seller would prefer to transfer the existing policy to the buyer.
109. A subordination clause in a trust deed benefits: A. The beneficiary B. The trustor C. The trustee D. None of the above
: B. A subordination clause allows the trustor to obtain a later trust deed which will move into prior position, as regards to payment, in case of default. It is to the trustor's advantage not to the beneficiary's
66. Property management, appraisal, financing, and development are all examples of A. factors affecting demand. B. specializations within the real estate industry C. non-real estate professions. D. activities requiring broker management and supervision.
: B. All are specializations in the field of real estate. Appraisal and financing do not require (real estate) broker supervision.
29. An owner of a 5 unit apartment building that is located within the city limits intends to covert the building into 5 condominium units and offer them for sale to the public. Under these circumstances, the developer: A. Must obtain a public report from the Real Estate Commissioner under the Subdivided Lands Act. B. Must file a map with the city under the provisions of the Subdivided Map Act C. Is exempt from the Subdivided Lands Act and the Subdivision Map Act D. Must comply with the Subdivided Lands Act and the Subdivision Map Act
: B. Any type of subdivision located within the city limits is exempt under the Subdivided Lands Act but a condominium conversion of 5 units or more is covered under the Map Act and must be filed with the local authorities.
84. Fisk owns a lot. He also owns a right of way easement over the property of his neighbor, Smith. This easement is appurtenant to Fisk's lot. Fisk sells his lot to Jones without specific mention of the easement in the deed. The easement: A. Remains with Fish as an encumbered interest B. Passes to Jones C. Terminates unless it is a covenant running with the land D. Reverts to Smith
: B. Appurtenant easements 'run with the land' and automatically pass to future grantees, whether mentioned in the deed or not.
101. Commissions of a licensed real estate broker specializing in property management are: A. Based on the first year's rent B. Based on a percentage of the gross rents collected C. Based on a percentage of the rents expected to be collected over the life of the leases D. Equal to the first and last month's rent
: B. Commissions are usually based on a percentage of the gross rents collected, not those expected over the life of the leases.
128. Harry owns a building in a commercial area of town. Tina rents space in the building and operates a bookstore. In Tina's bookstore, she has installed large reading tables fastened to the walls and bookshelves that create aisles from the front of the store to the back. These shelves are bolted to both the ceiling and the floor. Which of the following best characterizes the contents of Tina's bookstore? A. The shelves and tables are trade fixtures and will convey when Harry sells the building. B. The shelves and tables are trade fixtures and may properly be removed by Tina before her lease expires. C. Because Tina is a tenant, the shelves and tables are fixtures and may not be removed except with Harry's permission. D. Because the shelves and tables are attached to the building, they are treated the same as other fixtures.
: B. Common law protects business tenants who install fixtures for their business by treating these trade fixtures as their personal property and giving tenants the right to remove them before the end of their lease. Any damage to the building due to removal is to be repaired by the departing tenant. A licensee who participates in the sale of business properties should make known to purchasers what, if any, trade fixtures there are that will not convey with the building.
94. Other than non-dischargeable debts of a bankrupt debtor are cut off (discharged) A. Publication of the notice of the petition in bankruptcy B. Discharge in bankruptcy C. The first meeting of creditors D. Filing the petition in bankruptcy
: B. Debts are cut off (discharged) the date bankruptcy court issues a discharge.
85. Which of the following would normally install conduit? A. Plumbers B. Electricians C. Roofers D. Carpenters
: B. Electrical wiring is placed inside a metal pipe called a conduit.
31. During Broker Shaw's preparation of the Exclusive Authorization and right to Sell on Seller Norman's property, Norman asked that a clause be included which would require the buyer to accept primary liability in connection with the existing loan is transferred to the buyer. Shaw should enter with of the following in Paragraph 2 of the Exclusive Authorization and Right to Sell from: A. Buyer to take the property "subject to" the loan B. Buyer to "assume" existing loan C. Buyer to pay all cash D. Buyer to make a large down payment to preclude possibility of a foreclosure
: B. If a buyer assumes an existing loan, he accepts primary liability for that loan.
37. In general, when the supply of a certain commodity increases, A. price tends to rise. B. price tends to drop. C. demand for it tends to rise. D. demand for it tends to drop.
: B. If demand is constant and supply increases, sellers compete with each other by lowering prices.
25. Broker Stiles took a listing from a seller using the standard listing form. One week before the listing expired, the broker informed the seller that he had a prospective buyer named Bennett. After the listing expired, the seller listed with Broker Johnson. Johnson showed the property to Mr. Bennett and obtained an offer that was accepted. Under these circumstances: A. Broker Stiles gets a 6% commission B. Broker Johnson gets a 6% commission C. Both brokers get a 6% commission D. Broker Stiles gets a 3% commission and broker Johnson gets a 3% commission
: B. In the safety clause of the standard listing form, Broker Stiles would agree to relinquish his safety period if the property were listed with another broker.
27. Mr. and Mrs. Johnson who had been shopping for a new home found one that they liked very much but because they felt the property was overpriced, they decided not to buy it. Their reason for not buying was probably based upon the Principle of: A. Conformity B. Substitution C. Highest and best of use D. Anticipation
: B. It must be assumed that our buyer has found another home that was equally desirable but at a much lower price. This is the idea behind the Principle of Substitution.
172. A purchaser of real property utilizing leverage is: A. Using the maximum amount of his own money to purchase property B. Using the maximum amount of borrowed money to purchase property C. Making the maximum down payment for the property D. None of the above
: B. Leverage is the use of credit (borrowed money) to purchase a property. When a property is 80% leveraged it means a debt on the property is 80% of its value. The owner's equity is 20%.
129. A real estate license is a: A. Constitutionally protected right of the individual B. Privilege granted by the state C. Right granted by the office of the Attorney General D. None of the above
: B. Like a driver's license, it is a privilege.
105. When a developer sets up a subdivision, he places certain restrictions on each of the lots. Of these, experience has shown which of the following is least likely to be enforced: A. Limitations on size of each lot B. Limitations on the dollars allowed for improvements on each lot C. Limitations on square footage of each home D. Limitations on the number of stories or total height of structures
: B. Limitations for the amount of dollars allowed for the improvements on each lot is the most difficult type of restriction to enforce, because the value of the dollar changes and thus, the quality of the improvements would change.
140. The economic life of an improvement as compared to the physical life is usually: A. Longer B. Shorter C. The same D. Depends on the type of improvement
: B. Most houses are torn down before they fall down. When a house cannot be used for rental income or residential purposes it no longer has any economic worth and is generally torn down.
177. Which of the following would usually be considered real property? A. Timber B. Air space above the land C. Unharvested crops already contracted for D. Land fill dirt being moved
: B. Of the choices given, airspace above the land is considered real property.
152. Harris and Davis, single people, owned a parcel of real property as joint tenants. Harris encumbered his interest for $10,000 borrowing the amount to pay medical bills without the knowledge or consent of Davis. Shortly thereafter, Harris died, with the debt still unpaid. Which of the following would be true? A. Davis and the lender would be tenants in common, each owning one half interest in the property B. Davis would own all of the property free and clear of the encumbrance C. Davis would own all of the property but would be subject to the $10,000 loan D. Davis and the beneficiary would own the property as joint tenants, each with a one half interest
: B. On the death of one joint tenant, the survivors take title to the property without the obligation to pay an unforeclosed liens.
18. A salesman receives a deposit together with a written offer to purchase and delivers them to the employing broker who presents it to the seller. The seller signs and accepts the offer. Without the consent of the salesman and through no fault of his own, the buyer and seller instruct the salesman's employing broker to return the deposit. Which of the following is true? A. The salesman's employing broker may retain one-half of the deposit and must give one-half to the seller B. The broker may sue the seller but must return the deposit C. The broker may retain one-half of the deposit and must return only one-half to the buyer D. The broker may retain the deposit to compensate him for his efforts
: B. Once the offer has been accepted, the deposit money belongs to the seller. If the seller instructs the broker to return the deposit, the broker must do so. The broker has probably earned a commission and may sue the seller for the amount but may not hold the deposit money.
74. If an advertisement is placed in a newspaper advertising a home for sale and only the annual percentage rate is stated: A. The amount of the down payment must be included B. The number of payments must be included C. Additional disclosures are not required D. The amount for the payment must be included
: C. Stating the ARP is sufficient disclosure for the ad. The disclosure statement issued at or before closing would include a breakdown of the costs of credit, but not the ad.
196. Sam inherited Rolling Hills from his uncle. The first thing he did with the vacant property was to remove all the topsoil, which he sold to a landscaping company. Sam then removed a thick layer of limestone and sold it to a construction company. Finally, he dug 40 feet into the bedrock and sold it for gravel. When Sam died, he left Rolling Hills to his daughter, Pat. Which of the following statements is true? A. Pat inherits nothing, because Rolling Hills no longer exists. B. Pat inherits a large hole in the ground, but it is still Rolling Hills, down to the center of the earth. C. Pat owns the gravel, limestone, and topsoil, no matter where it is. D. Sam's estate must restore Rolling Hills to its original condition.
: B. Pat inherits exactly what Sam owned just before his death: a location on the earth's surface, everything below it to the center of the earth and the space above it toward the heavens.
90. How many acres are in the west ½ of the south ½ of the south ½ of the south ½ of section 27? A. 20 acres B. 40 acres C. 80 acres D. 160 acres
: B. Section 27 = 640 acres. S ½ = 320 acres. S ½ = 160 acres. S ½ = 80 acres. W ½ = 40 acres
5. A minority purchaser enters your office and states they are looking for, and interested in purchasing, a particular property in a minority neighborhood. You could legally assume that: A. This person is testing you B. They are interested in that particular property C. They are interested in owning a home in an all minority neighborhood D. They cannot qualify to own property in a higher priced area
: B. Should any prospective purchaser enter your office requesting to see a particular property, you would assume they were interested in that particular property.
116. To void litigation between a principal and a broker, it is best to have a/an: A. Written contract stating the statutory commission rate B. Written contract C. Oral agreement D. Contract established by estoppel
: B. The best way to avoid litigation is to have a written contract. Where there is a writing it often prevents a lawsuit. Answer "1" states that you should have a written contract "stating the statutory commission rate") which is an unlawful statement. Real Estate Laws prohibit agents from stating that the commission is established by statute. The listing form must have a ten point type that commissions are negotiable. They are not set by statute.
87. A broker who is hired by an owner to sell his property must reveal all significant and material information to the principal. Which of the following would be considered material information and must be revealed? A. The new lender will require the buyer to maintain an impound account B. Agent's knowledge that a better offer to purchase is imminent C. The prospective buyer is of oriental descent D. None of the above
: B. The existence of a better offer that is imminent could very well be a material fact to the seller. If would probably influence his decision on a present offer.
67. A major manufacturer of automobiles announces that it will relocate one of its factories, along with 2,000 employees, to Smallville. What effect will this announcement likely have on Smallville's housing market? A. Houses will be likely to become less expensive as a result of the announcement. B. Houses will likely become more expensive as a result of the announcement. C. Because the announcement involves an issue of demographics, not of supply and demand, housing prices will stay the same. D. The announcement involves an industrial property; residential housing will not be affected.
: B. The expected arrival of 2,000 employees and their families in a small town will cause sellers to raise their prices in expectation of the greatly increased demand and the long time it takes to build new housing. It becomes a "sellers' market" and the many buyers will have to compete for the few houses available.
187. Which of the following is not one of the four important elements of value: A. Scarcity B. Appreciation C. Utility D. Transferability
: B. The four elements of value are utility, scarcity, demand, and transferability.
183. From a historical standpoint, the major function, objective and aim of the FHA program has been provided by: A. Title I B. Title II C. Title III D. Title IV
: B. The largest and most important activity of FHA is the insurance, under Title II, of mortgages for home purchase and construction.
149. The law which governs the distribution of property after a dissolution of marriage is contained in the: A. Code of Civil Procedure B. Civil Code C. Business and Professions Code D. Commissioner's Rules and Regulations
: B. The law which governs the distribution of property after a dissolution of marriage is contained in the Civil Code.
143. Seller Able, the owner of Blackacre, lists the property for sale with broker Baker. Able fails to authorize the agent to accept the deposit on his behalf. Buyer Charlie makes an offer on Blackacre and gives broker Baker A check for $5,000 as a deposit. Under these circumstances, broker Baker: A. Can accept the check if he immediately gives it to seller Able B. Can accept the deposit an agent for the buyer Charlie and place the moneys in the broker's trust fund C. Cannot accept the deposit because of the wording of the listing agreement D. None of the above
: B. The owner did not authorize the broker to accept a deposit on his behalf. The Law of Agency demands an agent to accept all offers unless specifically instructed by his principal not to do so. Under these circumstances, the broker should take the offer, however, he would accept the deposit at the agent of the offeror, and hold the deposit as the agent of the buyer.
133. A person who has been given the right to act on behalf of another is known as a/an: A. Affiant B. Attorney in fact C. Executor D. Principal
: B. The power of attorney is the piece of paper and the one with the right to act is the attorney in fact
167. The security of a loan made on real property depends upon: A. The borrower's credit B. The value of the property being liened C. The stability and value of money D. All of the above
: B. The property is the underlying security for the loan.
157. An inner city neighborhood is well integrated with civic groups working to maintain social harmony. However, mounting problems with schools and with increasing crime have caused several white families to move out. In which of the following statements is Broker Brown in violation of the law: 1. He is actively soliciting listings in the area with the slogan "sell now, save equity". 2. He is offering lower commission rates to whites who patronize his business. A. 1 only B. 2 only C. Both statements D. Neither statements
: C. Both of these acts are in violation of the fair housing laws.
189. The following are correct statements concerning an option, except: A. The optionor must perform if the optionee exercises his option within the period specified B. The optionee must perform if the optionor exercises his option within the period specified C. To exercise the option, the buyer must pay the amount specified in the option D. The consideration for granting the optioned must be actual
: B. The question is a negative question asking for a false statement concerning options. Answer '2' states: The "optionee must perform" which is false. The optionee receives and the optionor must perform. The optionee is the one who exercises the option. Answers "1", "3", and "4" are all correct. Regarding answer "2", there must be some consideration. It may be money or an act. In a lease option, it often states that there is the option to purchase the property for $100,000. The consideration is the leasing of the property. The leasing of the property is sufficient consideration upon the part of the optionee. An option must contain all the terms of the purchase similar to a deposit receipt. At the time of exercise, all that the optionee must do is state: I will buy according to the option terms.
35. Which of the following is the classic definition of the boundaries of real property? A. The surface area indicated on a map B. A reasonable use of airspace and extended to the center or the earth C. A reasonable distance down and unlimited airspace D. A practical or reasonable use of the earth and unlimited airspace
: B. The surface of the earth and the material beneath the surface to the center of the earth is part of the real property. Since airways are now public domain, the ownership of airspace is 'use to an enjoyable and reasonable height'.
69. A lender of money on real property should be relatively certain that his mortgage is an enforceable lien. He can best accomplish this by: A. Recording the transaction B. A title insurance policy C. Providing for an acceleration clause D. A physical inspection of the property
: B. The title policy would guarantee to the lender that there were no prior liens on the property. If any did arise at a later date, the title company would protect the lender at that time.
2. A valid escrow requires which of the following: A. Escrow instructions with no conditions B. A binding contract between the buyer and seller and the conditional delivery of transfer instruments to a third party C. The services of a licensed real estate broker D. None of the above
: B. These are required for a valid escrow.
132. Collecting rents, fixing up the property and showing vacant units are the types of responsibilities that would be assumed by: A. A broker B. A resident property manager C. A salesman D. An attorney at law
: B. These are the types of things that a resident property manager does.
89. Real property includes the land, those things attached to the land, and thing called appurtenances. Appurtenances include all of the following except: A. A dwelling B. Trade fixtures C. Watercourses D. A fence
: B. Trade fixtures are considered personal property.
185. A form that is usually prepared to allow a real estate licensee to act as an agent for all principle parties to the transaction involved is: A. An agreement of sale B. An exchange agreement C. A loan broker's statement D. A real property securities statement
: B. Under an exchange agreement, the real estate licensee acts for both parties. This is one instance where he could earn a commission from each party to the transaction.
122. The "Statutory Dedication Process" is completed when: A. The appointed representative of the city or county signs accepting the dedication B. The final subdivision map is recorded C. The dedicated area is completed D. Local authorities deliver a signed acceptance to the subdivider
: B. Upon the final subdivision may being recorded. If the subdivider has dedicated an area through a Dedication Certificate and the dedication has been accepted by the properly authorized official, then the recording of the approved map would be the final step in the Statutory Dedication process.
48. Able buys Blackacre from Baker, taking title to the property subject to the existing loan. The person primarily responsible for the repayment of the loan would be: A. Able B. Baker C. Either Able or Baker D. Neither Able or Baker
: B. When a buyer takes title 'subject to' the loan, the seller retains the responsibility for the repayment of the note. The buyer takes no responsibility for the note. The buyer can lose a property by foreclosure because a property was bought encumbered with loan, but after the foreclosure, if there is a deficiency in the process, the buyer is not liable for that note deficiency. Any suit would be against the seller for the deficiency judgment as the buyer's name does not appear on the note.
65. In the event the parties to a Bulk Sale do not comply with the provisions of the Bulk Sales Law as outlined in the Uniform Commercial code, the party that would probably be injured the most would be the: A. Seller B. Buyer C. Creditor D. Lender
: B. When the parties to a Bulk Sale do not comply with the Bulk Sales Law, any outstanding creditor may step in and invalidate the sale and take the goods and have them sold to satisfy the debt. The only recourse the buyer has it to chase down the seller who has probably left the country.
26. A loan created with more than one borrower is usually added to the promissory note for the protection of the lender: A. Beneficially B. Jointly and severally C. Universally D. Unconditionally
: B. When there is more than one borrower on the note, the promise and obligation to pay that balance is the responsibility jointly of all the co-borrowers, and also each individual is severally liable for the full debt. Severally, in law, means individually.
164. A balloon payment is a part of a: A. Fully amortized loan B. Final payment made on any loan secured by a trust deed C. Partially amortized loan D. None of the above
: C. A balloon payment is defined as the final payment when it is an amount more than twice the smallest payment and the loan is classified as partially amortized as opposed or fully amortized.
68. Which of the following, when authorized by the broker, could make a withdrawal from the broker's trust account: A. No one can ever withdraw money from the broker's trust account except the broker B. Any employee, as long as the broker is incorporated C. Any unlicensed employee provided that the employee is covered by a surety bond protecting the broker D. Any of the broker's licensees
: C. By law, anyone other than the broker, such as a clerical employee, must be bonded in order to be able to withdraw funds from the trust account.
57. As a part of the purchase price, the seller of a parcel of land accepted a purchase money first trust deed which contained a subordinate clause. This clause would: A. Guarantee priority of the first trust deed B. Preclude the buyer from placing construction loans on the property C. Permit the buyer to place a future loan on the property that would have priority D. Permit additional liens to be placed against the property without the buyer's consent
: C. A loan and a trust deed that contains a subordination clause supercedes the rule "the first to record is the first in right" - a subordination clause in a note and trust deed is evidence that the lender agrees that a future obtained trust deed may be prior to this loan even though the future loan is recorded later. Often times builders use this clause in a trust deed and note used to purchase raw land from the owner. They offer the owner the full price contingent upon him carrying back financing for the land. The trust deed that he is to receive from the builder must contain a subordination clause in which the owner of the land agrees to be junior in priority to a future recorded construction loan.
175. The liquidity of a borrower is generally determined by a loan officer in considering: A. Debt to equity B. Income total assets C. Current assets to current liabilities D. Fixed assets to current assets
: C. A loan officer in determining the liquidity of a borrower, is attempting to determine his ability to pay off current bills. Current assets to current liabilities would be the test he would use
188. Madison is a mortgage loan broker. When setting up a loan, Madison differs from Carter, a mortgage banker, in which of the following ways: A. Carter is authorized by law to make larger loans than Madison B. Madison is exempt from the Finance Code C. Madison does not normally use his own funds in arranging a loan D. Carter deals primarily in loans which must be recorded. Madison's loans are normally not recorded
: C. A mortgage loan broker normally does not loan his own funds, but negotiates the placement or sale of a loan with a particular lender. A mortgage banker generally has the funds with which to make a loan.
113. If there is no special agreement to the contrary, the mortgage usually having priority is the one: A. For the greatest amount of money B. That is a construction loan C. That is recorded first D. That is executed and delivered first
: C. A mortgage or trust deed priority is established by recording.
130. If, in a transaction, the amount made as a deposit is not sufficient to cover the monetary damages incurred by a party to the real estate sales transaction, the following party could not file an action in a court of law: A. The buyer B. The seller C. A real estate broker acting as an agent for his principal D. An attorney action for his principal
: C. A real estate broker acting as an agent for his principal is a special agent. The broker's powers are limited to acting in the sale of the property. He has no power to file a court action for his principal.
119. A trustor defaults on his loan and refuses to reinstate the deed of trust. The most expedient thing for the beneficiary to do is to institute a: A. Sheriff's sale B. Lien sale C. Trustee's sale D. Judicial foreclosure
: C. A trustee's sale would be the recommended procedure when there has been a default on a trust deed. It has many advantages over a judicial foreclosure.
36. A buyer defaults on a loan, therefore the lender would be able to cause the promissory note to become due and payable. This clause is a/an: A. Subordination clause B. Escalator clause C. Acceleration clause D. Alienation clause
: C. Acceleration clauses are several different types and reasons.
34. A buyer defaults in making payments on a loan, therefore the lender's action probably would result in: A. Subordination B. Escalation C. Acceleration D. Alienation
: C. Acceleration indicates the right to declare the entire sum of a note to be due and payable immediately. Most trust deeds contain several acceleration clauses. Most common states: if you become delinquent in the payment on this note, the entire sum of the note becomes due and payable immediately. Other states: The entire sum of the note is due upon the sale or transfer of the property" triggered by the sale of the property and therefore is a specific acceleration clause. The rule is: alienation clauses are types of acceleration clauses but not all acceleration clauses are alienation clauses.
63. An employee of a corporate licensed as a real estate broker that is working as a member of the corporate's sales staff: A. Does not require a real estate salesperson's license B. Must be a licensed real estate broker C. Must be a licensed real estate salesperson or broker D. Does not require a real estate license provided that person is an officer of the corporation
: C. All sales staff members employed by a licensed real estate corporation must have some form of a license, either a salesperson or a broker.
53. Daniels purchased 60 acres of land near a city. He intended to subdivide it for sale as single family residential lots and sell the lots for cash. Daniels needs maximum financing to put in streets, curbs, gutters, sidewalks, etc. He wants to pass the cost of these to the lot purchasers in such a way that when title policies are issued to future lot owners, the policies will contain no reference to assessment liens for the above stated purposes. Daniels best course for financing these needs will probably be: A. Real property sales contracts B. Improvement bonds C. Interim loans from institutional lenders D. Corporate stock
: C. Answer 'b' would result in assessment liens; answers "a" and "d" are not specifically financing means for such improvements, by elimination, answer "c" is the best choice.
11. Many real estate contracts are in writing on forms. Parts of these contracts are written and parts are printed. In the interpretation of such contracts: A. Printed parts take preference over the written parts B. The written parts and the printed parts are given equal consideration C. The written parts take preference over the printed parts D. Any parts copied from the form take preference over those that are purely original
: C. As regards to contracts, the written takes preference over the printed parts and oral agreements take preference only when the written contract is incomplete or ambiguous.
1. Which of the following items could not be used by the owner of a hardware store as security for a loan, under the provisions of the Uniform Commercial Code? A. A personal note endorsed by him B. Accounts receivable C. Stock for sale D. Equipment and fixtures
: C. As the stock will be sold, it cannot be used to secure a loan.
191. The real estate commission for a property that is in probate is set by: A. The real estate B. The decedent C. A court order D. A probate officer
: C. Commissions for property sold in probate are set by the individual court district.
120. Real estate generally includes all the following EXCEPT A. trees B. air rights. C. annual crops. D. mineral rights.
: C. Common law treats annual crops, those that must be planted each year, as the personal property of the one who planted and tended them. When a farm is sold, trees, air rights, and mineral rights may all convey, but the annual crops (fructus industriales, or emblements)—lacking effective contractual agreement to the contrary—are still the personal property of the tenant farmer or other person who planted them. The farmer may return and harvest them in season.
178. Conventional loans are distinguished from FHA insured loans by all of the following except: A. Conventional loans provide for a lower loan-to-value ratio B. FHA loans generally provide for a longer repayment period C. Conventional loans always permit a deficiency judgment, while FHA loans never allow them D. Interest rates on FHA loans are generally lower than those on conventional loans.
: C. Deficiency judgments are not allowed on purchase
136. The relationship between effective and nominal interest is that: A. Effective interest is what the buyer pays; nominal interest is what is named in the loan application B. Effective interest is what the buyer pays; nominal interest is what is named in the advertising C. Effective interest is what the buyer pays; nominal interest is what is specified in the note D. There is no difference
: C. Effective rate is the actual interest rate paid by the borrower. Nominal rate is the interest rate specified in the note.
200. Which of the following actions or events would result in the termination of a sales escrow? A. Revocation of the escrow instructions by the broker of the seller B. The cancellation of the escrow by either party C. The mutual consent of the parties D. The death of either of the parties
: C. Escrow instructions are an agreement between buyer and seller, and cannot be unilaterally canceled without the consent of the other. Death would not terminate their agreement, but the instructions would be a contract normally binding upon the heirs. Escrow can be terminated by the mutual consent of the parties.
71. Mutual mortgage insurance would be included in the issuance of: A. A conventional loan B. A Cal-vet loan C. An FHA loan assumption D. A VA backed loan
: C. FHA insures loans with mutual mortgage insurance; it is used by FHA to pay lenders any loss, within the insurance limits resulting from foreclosure.
197. A true statement regarding floor waters is that flood waters: A. Refer to water in minor depths, either standing or flowing, which do not produce serious surface scour or leave deposits of silt B. Refer to water on the surface of the land but lower than the water table in the area C. Are deemed the enemy of every affected owner and owner may protect their property by employment any reasonable protective measures D. Are found below the water table, at the water table, and above the water table
: C. Flood waters (water from a downpour, river overflowing its bank) one may protect himself against such flood by building a dike, or sand bagging or other methods of diverting the water to other property owners.
131. A salesperson receives an offer from a buyer who has no cash but offers a deposit of $500 in the form of personal note payable in thirty days: A. This is unacceptable since a deposit must be in cash or a check B. The form of deposit is immaterial as long as the $500 figure appears on the deposit receipt C. A salesperson may accept a personal note as deposit if he advises the seller of this prior to acceptance D. A salesperson may accept a note if made in favor of the broker to handle expenses
: C. It is perfectly all right for the salesperson to accept a personal note as a deposit but this must be disclosed to the seller before the acceptance of the offer.
179. Brother and sister purchased property as joint tenants. Later, the sister marries and deeded her interest to herself and her husband: A. The joint tenancy continues to exist in all three persons B. The brother remains as a joint tenant C. The joint tenancy is terminated D. The sister's deed to her husband is voidable by the brother
: C. Joint tenancy require the four equal unities of time, title, interest and possession between two or more parties. Once any of the four unities is broker, it can no longer be a joint tenancy.
88. Generally, the most important determinant of a property's value is: A. Age B. Utility C. Location D. Income
: C. Location is the most important factor influencing value, the other factors being utility, size, shape, thoroughfare conditions, exposure, character of the business climate, plottage or ssemblage, character of the soil, grades, obsolescence, building restrictions and zones.
14. Where a broker show a client's property to a prospective buyer that is listed with the broker under an open listing, the broker should: A. Make up an office memorandum B. Confirm the showing to the buyer C. Notify the seller as to the prospect's identity D. Notify the local real estate board
: C. Notifying the seller establishes the broker's right to collect a commission as "procuring cause". Answer "3" provides the only effective way of establishing that right.
199. The primary justification for zoning ordinances is that they: A. Promote conformity in the outward appearances of structures B. Limit the supply of specific businesses within a zoned area C. Promote the general health, safety and welfare of the community D. Increase the tax base of the local governing body
: C. One of the requirements before a zoning ordinance is considered lawful is that it promotes the general health, safety and welfare of the community.
142. All of the following are required of a real property security dealer, except: A. A real estate broker's license B. The issuance of a real property security dealer's statement to each person purchasing a real property security C. File and maintain with the Commission a $5,000 bond D. Post an additional $5,000 bond for each series transactions involving a real property security
: C. Only one bond is required. An additional permit is required for each series of transactions
78. An advertisement for the sale of real property placed by a real estate broker is prima facie evidence of fraudulent and misleading information when: A. A misleading map is included in a newspaper advertisement offering a twenty year old single family residence for sale B. The selling price and financing terms are not as stated C. The interest rate on the note differs from its advertised yield D. The name of the development is misspelled
: C. Prima facie means on its face without further evidence. Real Estate Law specifically states that no place an advertisement concerning a note with an effective yield that does not also state the rate on the face of the note is prima facie evidence of fraud.
52. Of the following, the method which allows the most depreciation to be taken during the first year would be: A. Straight line method B. 150% declining balance method C. 200% declining balance method D. Sum-of-the-Years digits method
: C. The 200% declining balance method of depreciation allows the most depreciation for the first year. The sum-of the-years digits method allows the most depreciation in the earlier years.
44. Broker Young, as an agent, showed a property to James. James signed a deposit receipt which contained the following words: Buyer to accept the property in an as-is condition. Broker Young knew that the plumbing in the property was in a major state of disrepair with parts missing, but he did not tell James. The problem with the plumbing would not be apparent to an ordinary, prudent person. If James sued the seller for damages for fraud, the court suit would probably be: A. Unsuccessful because the 'as is' provision in the deposit receipt shows that there is a mutual understanding of possible defects B. Unsuccessful because the deposit receipt specifically state 'Buyer to accept the property in an 'as is' condition' C. Successful because the duty to disclose a material fact cannot be avoided by an 'as is' provision under the stated circumstances D. Successful because 'as is' refers only to obvious defects
: C. The Real Estate Commissioner and the courts are very protective of consumers. Therefore, they will not allow an 'as is' clause to be valid except for obvious defects, which any reasonable and prudent person could discover.
61. Prior to the sale of a subdivision, a subdivider must show proof to the Real Estate Commissioner that: A. Utilities, water, gas and lights will be on the property B. Fill on the lots will not exceed 24 inches in depth C. Parcels of land will be used for the purpose stated D. Assessment bonds will not be used for offsite improvements
: C. The Real Estate Commissioner is very much concerned that parcels of land in a subdivision be capable of being used for the purposes stated in the final report. The parcels may be sold without utilities, as long as they were not included in the report filed by the subdivider. Assessment bonds would be for sewers, street lights, curbs, etc.
115. Assume a broker sells a house built by a subdivider and title is passed by a grant deed. Under usual procedures, which of the following will be obtained from the beneficiary under an existing blanket deed of trust: A. A grant deed B. A quitclaim deed C. A partial reconveyance D. A warranty deed
: C. The beneficiary will give a partial reconveyance deed reconveying that one lot.
108. After six lots have been sold in subdivision, the Real Estate Commissioner was informed of misrepresentation in the sales program. The Commissioner could halt the sale of more lots by: A. Voiding the public report B. Attaching the unsold lots C. Issuing a desist and refrain order D. Filing an accusation in court
: C. The best course of action available to the Commissioner would be a desist and refrain order, such an action would immediately halt all future sales for marketing of the property.
117. A mortgage that was executed two years ago provided for a prepayment penalty. The mortgagee is most likely to waive this penalty when: A. The supply of money exceeds the demand B. Deflation is the trend and low interest rates are common C. A new loan can be made on the property at a higher rate D. Building costs are rising substantially
: C. The lender charges a prepayment penalty because of the loss of interest resulting from the early payoff of the debt. A new loan, at a higher interest rate on the same property would make up for the loss of interest on the loan that was prepaid.
163. A primary source of funds for residential mortgage financing is: A. Federal Home Loan Bank B. Federal Savings and Loan Insurance Corporation C. Federal Savings and Loan Associations D. Federal Housing Administration
: C. The primary source of funds for residential mortgages is federal savings and loan associations. The money ultimately comes from household savings, but the sources for the loans are the savings an loan associations.
192. "The value of the best property in the neighborhood will be adversely affected by the presence of comparatively substandard property", is a statement relating to value and is known as the principle of: A. Balance B. Contribution C. Regression D. Progression
: C. The principle of regression states that the worth of a greater valued property is reduced by the proximity of many lesser valued properties of the same type.
195. "No prudent person would pay more for a parcel of real property than the price of a reasonably close alternative, which is available without undue delay", refers mast nearly to the principle of: A. Balance B. Conformity C. Substitution D. Intervention
: C. The principle of substitution, in essence, states that "no prudent person would pay more for a parcel of real property than the price of a reasonably close alternative which is available without undue delay".
33. The owner of a single family residence plans to sell and wants to obtain an FHA appraisal to permit a sale with FHA financing. He should: A. Contact the nearest FHA office for an appraisal of this property B. Have a lender apply for a firm commitment C. Have a lender apply for a conditional commitment D. Submit a recent appraisal of his home to FHA
: C. The recommended process for the lender to contact FHA for a 'conditional' commitment; that is; for advance assurance that an FHA loan will be made, establishing the loan value for the house.
124. At 12:00 noon, Baker made an offer to purchase a single family residence. He instructed his real estate broker not to present his offer until 6:00 PM. By 6:00 PM, three more offers had been submitted. The real estate broker should: A. Ignore the other offers B. Present all offers to the property owner in the order they were submitted C. Present all offers to the property owner simultaneously as soon as possible D. Wait until the seller acts on the first offer before presenting the other offers
: C. The rule of agency is that all offers must be presented to the seller and let the seller make the decision as to which offer to accept.
81. Which of the following best describes a 'complete' escrow? A. It is considered a perfect escrow B. The escrow holder has ceased being an agent for both parties C. All papers are properly drawn up and ready for final steps to be taken to close the escrow D. All services of the escrow holder are involved
: C. The settlement in choice "c" describes a 'complete' escrow. Usually an escrow is 'complete' in the evening and closes the following morning when the deed is recorded.
45. To alienate title to real property, one would: A. Encumber it B. Place a homestead on the property C. Convey the title D. Cloud the title
: C. The term 'alienate' means to transfer or convey. To alienate title means to convey it.
190.The provision that states "The Realtor shall not publicly disparage the business practice of a competitor" appears in the: A. Real Estate Law B. Commissioner's Rules and Regulations C. NAR Code of Ethics D. Business and Professions Codes
: C. This provision appears in the National Association of Realtor's Code of Ethics.
55. Which of the following factors is most likely to influence demand for real estate? A. The number of real estate brokers in the area. B. The number of full-time real estate salespersons in the area. C. The wage levels and employment opportunities. D. The price of new homes being built in the area.
: C. When wage levels and job expansion are increasing, workers are more likely to buy real estate; when wages are stagnant or declining, they hold back from making big purchasing commitments. Effective demand requires not only the desire to purchase a product, but also the financial means to do so.
139. A property is not listed for sale. A person who wants the property executes an offer to purchase it through a real estate agent and gives the broker a $5,000 check as a deposit. The broker: A. Can accept the check on behalf of the property owner provided he presents the offer directly to the seller as the seller's agent B. Cannot accept the check C. Can accept the check as the exclusive agent of the buyer D. None of the above
: C. You can accept the check as exclusive agent for the buyer, but you have no listing with the seller.
17. A primary justification for zoning ordinances is to: A. Maintain conformity to buildings in the zoned area B. Prevent an oversupply of certain types of businesses C. Promote public health, safety, morals and general welfare D. Control the quality of building construction
: C. Zoning laws are exercise of the police powers which are for the public health, safety, morals and general welfare. No compensation need be paid in exercise of police power, as they are for public protection.
70. After the due date Able makes a payment on a mortgage loan. By statute, the payment on the loan is considered late when received by the lender on: A. The first day aft after the due date B. The fifth day after the due date C. The tenth day after the due date D. After the tenth day after the due date
: D. "By statute". Most lenders allow longer (i.e. 15 days) but this law establishes the minimum.
30. After acquired title is conveyed in any trust deed for the benefit of the beneficiary. It conveys: A. Personal property later affixed to the real property so as to become real property B. Improvement built on the land after title is acquired C. Additional land acquired afterward by the trustor D. All of the above
: D. 'After acquired title' refers to title to fixtures or other real property items, that become part of the land that is securing the existing trust deed. If a lot serving as security for a loan made ten years ago has land affixed to it, that land becomes encumbered with the lien made ten years ago. If additional improvements, such as a swimming pool, added bedroom or new landscaping are added to the real property, they to become encumbered with a trust deed lien made ten years ago.
50. An apartment owner was figuring his net income for income tax purposes. He took the gross income and deducted certain expenses. Of the ones listed below, which could he not deduct: A. Depreciation B. Interest on loan for purpose of purchasing the property C. Management expenses D. Cost of a fence
: D. A fence would be a capital improvement. The cost of it should be added to the cost basis of the property and depreciated.
168. The requisites of a grant deed when compared to a land contract of sale may differ with respect to: A. Interest conveyed B. Signatures of the principal parties C. Designation of purchased price D. All of the above
: D. A grant deed and a contract of sale differ in the signatures of the principals, as a grant deed requires only the signature of the grantor, but the contract of sale requires the signatures of the vendor and vendee. They generally do no disclose the purchase price in a grant deed but must in the contract of sale because it is a contract. A grant deed has implied warranties and the contract of sale has no implied warranties.
174. Which of the following statements is correct concerning a land contract: A. It is used when the seller wishes to convey title without a trustee relationship B. It is similar to a lease in that the buyer has a right of possession but no rights in the title C. The buyer has absolute assurance of receiving title upon performance of the contract D. It is the least secure method of financing real property for the buyer because the seller has retained the title and the buyer is merely the equitable owner
: D. A land contract is a security device used in financing real property, but "it is the least secure method for the buyer, since the seller does retain the title". The buyer is the equitable owner, which means that he can use the property. While the seller retains the title, the buyer has rights in that title, and he often records the land contract to give public notice of those rights.
145. Using a note as a deposit from a buyer in making an offer: A. The note must be cashed before opening escrow B. A note cannot be used as a deposit for an offer C. The note would be the same as cash D. The agent should inform the seller that the deposit is in the form of a note before the seller accepts the offer
: D. A licensee may accept a note from a buyer as a deposit, other in the form of a deposit given by builders. The licensee must then inform the seller that the deposit is a note before the seller accepts the offer.
156. A broker who takes a listing with option to purchase is, first of all: A. A principal B. An optionor C. An optionee D. An agent
: D. A listing agreement which contains an option to purchase is first of all a contract employing the broker to act as an agent for the owner in the sale of the property and that is his principle role. If he exercises the option he operates in the capacity of a principle in its resale, but this is secondary to this responsibility as an agent.
83. A lender would be exempt from the requirement of providing the borrower with a Federal Right to Rescind Notice except: A. If the loan is for more than $25,000 and is not secured by the borrower's personal residence B. If security for the loan is commercial property C. If the loan is for business expansion D. If the borrower is refinancing
: D. A negative question. Refinancing your personal residence is not an exemption and is fully covered by a three day right of rescission
171. Which of the following real estate syndicates requires 100 or more investors: A. Limited partnership B. Joint venture C. Corporation D. Real Estate investment trust
: D. A real estate investment trust, which is organized under federal laws, must have 100 or more investors
7. All of the statements below are true, except: A. A grant deed may convey "after acquired" title even when such warranty is not actually written into the contents of the deed B. A quitclaim deed may convey any right or title including fee simple title C. A deed is of no effect unless delivered D. A reconveyance deed is used to convey title to a new purchaser in connection with a "trust deed sale"
: D. A reconveyance deed is given by a trustee to the borrower (trustor) after a loan has been paid in full. The borrower records his deed of reconveyance to clear the loan lien from the record.
86. Two people entered into a land contract for the purchase of a home and the contract was recorded. A few months later, the vendee abandons the property and defaults on the contract. If the vendee refuses to execute and record some form of release, it will: A. Not affect the marketability of the property B. Result in a deficiency judgment C. Result in a trustee's sale D. Create a cloud on the title
: D. A recorded land contract show an equitable interest in the property. When the vendee (buyer) defaults and abandons the property the land contract becomes a "cloud on the title" until it is removed by either a quitclaim deed or a quiet title action.
24. The right to foreclose a trust deed, under a trustee's power of sale, outlaws: A. In four years B. In three years C. In two years D. Never
: D. A trust deed is not a contract, but rather a conveyance of the naked legal title with the power of sale from the trustor to the trustee. Therefore, the trustee retains the right to sell the property under the trust deed at any time for the benefit of the beneficiary. The conveyance has been performed and thus is not under the Statute of Limitations; therefore, it never outlaws.
15. Concerning business opportunities: A. The bulk sales law is contained in the Uniform Commercial Code B. A bill of sale is used to convey title to business items C. Sales tax is a tax on the sale of tangible personal property D. All are true statements
: D. All are true.
92. Able submitted an offer to purchase Blackacre. During the escrow period a local credit reporting agency submitted detrimental information which Able contested. Able made repeated attempts to get the matter corrected and he was denied access to the information reported to the agency. Able may: A. Bring an action to recover punitive damages of no more than $5,000 B. Bring an action in a court of appropriate jurisdiction to recover actual damages C. After a prescribed time, require the reporting agency to delete such information from the report D. All of the above
: D. All choices are open to the principal in question.
135. Which of the following represents a gross misrepresentation by an agent: A. His representation is an obvious falsehood B. His representation is made with a knowledge of the falsehood C. His representation caused the aggrieved party to enter into the contract D. All of the above
: D. All of these are examples of gross misrepresentation by an agent.
47. Which is true concerning an option: A. Title acquired by exercising an option usually dates back to the time of the option and cuts off intervening rights acquiring with knowledge of the existence of the option B. Only the optionor is bound to a sale C. The optionee has no interest or estate in the land D. All of the above statements are true
: D. All of these statements are true.
176. The owner of a property who signed a listing with a broker for 30 days was killed in an accident before the listing expired. The listing is: A. No good as an authorization but binding if a buyer is secured later B. Still in effect as the owner's interest was clear C. Binding upon owner's heirs to carry out his promises D. Terminated by the death of the owner
: D. All personal service contract, such as listings, are terminated immediately upon death of either party
64. In addition to certain municipal or county regulations which apply to the construction of a subdivision, such as zoning laws and the State Map Act, other government regulations may be imposed upon the subdivision by: A. Health, fire and building safety laws B. The Department of Real Estate C. Governmental lending agencies such as FHA and the VA D. All of the above
: D. All three choices may impose additional regulations which apply to the construction of a subdivision
49. A lessee's interest is: A. Personal property B. A chattel real C. A grant to use property for a period of time which reverts to the grantor at the expiration of the term D. All of the above
: D. All three choices refer to the lessee's interest in real property. Always keep in mind that a lessee's interest is personal property known as chattel real.
118. An ad offering "secured loans for sale" would be regarded as misleading unless: A. The ad was placed by a licensed loan broker B. Each purchaser was offered a standard title insurance policy covering the encumbered properties C. The broker secured the borrower's signature on the loan broker statement D. The ad fully explained how and to what extent the funds would be secured
: D. An ad offering a 'secured' loan must disclose how and to what extent the loan is secured
23. An "able buyer" means one: A. Financially able B. Having the ability to obtain the necessary funds to purchase real property C. Having the ability to obtain necessary financing D. Any of the above
: D. Any of these would indicate an 'able' buyer
80. The words Broker and Realtor are A. interchangeable B. different categories of membership in NAR. C. different titles offered by separate professional organizations. D. unrelated: A broker is a real estate licensee and a Realtor is a member of NAR.
: D. Brokers are licensed by their state; Realtors are voluntary members of the NAR, a trade association.
162. In order to bring court action to collect a commission earned for negotiating a month-to-month rental, the broker: A. Must have a written listing signed by the owner of the property B. Could not have charged more than 25% of the first month's rent for his services C. Must have been registered with the Real Estate Commissioner as a rental broker D. Need prove only an oral agreement to pay a commission
: D. Contracts which are to be performed in less than one year, such as a month to month rental, and agreement leading up to the final contract (listing for a month).
39. An offer by one of the parties to a real estate transaction to carry out that party's part of the contract is called a: A. Gratuity B. Satisfaction C. Recourse D. Tender
: D. Usually made at the conclusion of the transaction, the tender is the offer to perform on the terms agreed to. If the other party cannot perform, then the party that made the tender can rightfully claim the other party defaulted.
137. In assessing the profitability of a real estate office, the broker must consider "desk cost". Which best describes how to calculate "desk cost"? A. Calculate the cost of all the desks B. Calculate the gross profit for the office, less the expenses, divide by the number of desks C. Divide the total cost of rent, utilities and advertising by the number of desks D. Divide the total operating expenses of the office, including salaries, rent, insurance, etc. by the number of desks
: D. Desk cost is the total cost of operating expenses of an office divided by the number of desks in the real estate office.
169. In advertising a listed property for sale, a broker may not legally: A. Run an ad which does not give the listing price of the property B. State the kind of financing available C. Fail to state the street address of the property D. Run an ad giving the impression that he is the owner of the property
: D. For a broker licensee to use an ad which gives the impression that the property is being sold by the owner himself/herself when the broker has, in fact, secured a listing on the property, would constitute substantial misrepresentation. This kind of action is unlawful.
76. In the sale of a business opportunity, which of the following would contribute the least to goodwill: A. Advertising over a period of time B. Continued public patronage of the establishment C. Pleasant associations in the customers' minds because of past associations D. Adequate stock and modern fixtures
: D. Goodwill is defined as the expectation of continued public patronage. Of the choice offered, adequate stock and modern fixture would contribute the least to that expectation.
59. The type of legal action that would most likely be taken in the event of a default on a land contract would be: A. Lis pendens B. Writ of execution C. Foreclosure by trustee's sale D. Quiet title action
: D. If the original land contract had been recorded and the buyer has defaulted, there would be a cloud on the title and some form of legal action would be required to clear the title. This would not be a foreclosure but a quiet title action.
198. Single family home values are least protected in neighborhoods where there is: A. A similarity of income of the owners B. A predominance of residents belonging to the same ethnic or religious group affiliation C. A minimum of change to existing restrictions as a result of legal restrictions D. An increasing mixture of average quality homes with high quality homes
: D. In an area where average quality homes are being constructed among high quality homes, there would tend to be a decrease in the overall neighborhood property values.
93. Mr. O'Riley paid an owner $10 for an option containing this clause: "Option to be for 60 days from June 1, 1967. Upon exercise of option, holder is to purchase within 30 days thereafter for all cash consideration." On July 10, Mr. O'Riley sold and assigned his option for $1,000. On July 28, the new holder notified the owner that he would purchase on August 15. The owner claimed the option was void. The option was: A. Void, because the holder sold it B. Void, because date of purchase was not within the option period C. Valid, even though Mr. O'Riley sold it, but August 15, was too late for date of sale D. Valid, and assignee could purchase on August 15
: D. In as much as the terms of the option are for all cash consideration and no unsecured promissory note is involved, it must be sold or assigned. Because the new holder exercised the option within the 60 days period (before July 30) and purchase the property with 30 days of the exercise date (before August 30) the option is valid.
21. In portfolio risk management, a lender considers: A. Diversification B. Liquidity C. Reserves D. All of the above
: D. In portfolio risk management, a lender determines what type of loans to have in his portfolio. Factors are: How quickly can I sell these loans? What are my reserves? How diversified are these loans? Are they all business? Are they all residential? Are they a mixture of business and residential?
111. MAI, SIR, RNMI, IREM and FCI are affiliated with: A. CAR B. DRE C. DAR D. NAR
: D. NAR is the National Association of Realtors. NAR has nine affiliated institutes, societies and councils, including the American Institute of Real Estate Appraisers (MAI) Member Appraisal Institute), The Society of Industrial Realtors (SIR), Realtors National Marketing Institute (RNMI), Institute of Real Estate Management (IREM) and the Farm and Land Institute (FLI).
46. Real property would include: A. Real property tax lien B. Trust deed C. Crude oil which has just reached the surface in a pipe drilled beneath the land D. None of the above are real property
: D. None of the possible answers to this question is real property. A tax lien and a trust deed, although having to do with real property, are not real property. Oil which has been 'captured' is personal property.
114. Broker Able procures a lessee for a lessor for a five-year lease agreement. The usual method of compensation would be: A. A flat fee B. A percentage of the first year rent C. A percentage of the total lease paid in one lump sum D. A percentage of the total lease to be paid monthly or annually
: D. On longer term leases the agent is entitled to their compensation on the total or full amount of the lease, but the compensation is usually paid each month over the life of the lease on shorter terms and for the first few years on the extremely long term leases.
41. A buyer of a residence, prior to the close of escrow, asks the broker for permission to move into the property. The broker should: A. Deny the buyer permission B. Grant the buyer oral permission C. Ask the buyer to sign a lease for the property D. Obtain written consent from the owner
: D. Prior to the close of escrow, the seller is still the owner, therefore, the broker should get written consent from the owner before allowing a buyer to take possession.
153. Occasionally, the title to real property becomes unmarketable. Which of the following causes would be least likely to result in that eventuality? A. Imperfect title, due to a breach caused by adverse possession of a prior owner B. A lis pendens filed by the husband of the owner of record C. Restrictions imposed by a private owner through a deed notation D. Public restrictions contained in zoning ordinances and building cods
: D. Public restrictions rarely cause title to real property to be unmarketable; private restrictions sometimes do.
110. An agency relationship can be established by all of the following, except: A. Agent volunteering B. Oral agreement C. Implied statement of law D. Agreement of principal
:A. An agent cannot volunteer to be your agent. An agency can be established by an agreement with the principal. It can be implied: "by your acts, the principal accepts your agency". It can be an oral agreement. Agency does not have to be in writing but the commission agreement must be in writing.
12. A lender possessing a chattel mortgage may: A. Assess it B. Hypothecate it C. Alienate it D. All of the above
: D. Re-emphasizing a prior question concerning the terms: alienate, hypothecate and assess. A chattel mortgage is a mortgage secured by personal property. Such a mortgage may be used as security for an additional loan. When the property is put up as security for a loan and one retains possession, it is said to be hypothecated. Personal property may be assessed for personal property taxes and/or federal estate taxes.
95. In which of the following ways may an agency relationship not be created: A. Verbal authority B. Necessity or emergency C. "Post hoc" ratification D. Subordination
: D. Subordination means lie, trickery or deceit; hence, it cannot be a valid way to create an agency
146. Richard Rock, a new real estate salesperson, made strong efforts to obtain listings in a nonintegrated community. He found success by insinuating to property owners that should minorities move into the area, the value of their homes would increase. Which of the following terms best describes the activities of salesperson Rock: A. Steering B. Panic peddling C. Blockbusting D. Both "1" and "3"
: D. Such activity is described as both panic peddling and blockbusting.
147. Which of the following will be found in the Federal Fair Housing Law: A. A provision that real estate licensees should not discriminate in the sale of any real estate B. A code of ethics which requires all real estate brokers to follow the "Golden Rule" C. A provision which allows for mortgage subsidy insurance in government loans D. A provision which allows all prospective buyers to be given the same opportunity to select available houses in their price range without restrictions because of race, color, religion or national origin
: D. The Federal Fair Housing Law applies to residential property and prohibits discrimination on the basis of color, race, religion or national origin.
13. A real estate broker is usually: A. A fiduciary to a person interested in buying a property the broker has listed B. An attorney-in-fact C. An agent serving the principal under a duly executed power-of-attorney D. None of the above
: D. The broker is usually the agent (fiduciary) of the seller and usually does not have a power of attorney.
91. Which of the following items is usually considered to be a cost of home ownership? A. Land depreciation B. Improvement appreciation C. Amenity value D. Interest lost on the owner's equity
: D. The interest that is lost on owner's equity is usually identified as lock in equity. This term applies to the fact that the owner cannot utilize the funds for other investment purposes
134. A prudent lender would take into consideration which of the following before issuing a loan? A. Borrower's ability to pay B. The market value of the property that is the security for the loan C. Current economic trends D. All of the above
: D. The lender would consider all aspects of the loan as mentioned in choices "1", "2" and "3".
99. In negotiating certain loans a broker is required to fill in all of the items on a Broker's Loan Statement Form. The following item must be inserted: A. What the borrower intends to do with the proceeds of the loan, less expenses B. A statement of the value of the property supported by a proper appraisal C. The date on which the borrower acquired the property D. The amount that will be charged by a qualified agency to render a report on the financial capacity of the borrower
: D. The loan broker law requires among other things, that the broker's loan statement contain estimated costs including appraisal, escrow, title, notary, recording and credit investigation.
100. Which of the following is not a characteristic of an easement: A. It is an interest which can be protected against interference by third persons B. It is capable of being created by a conveyance C. It is considered a non-possessory interest D. It is an interest that can be terminated at will by the processor of the land
: D. The possessor of the land is the owner of the land. He cannot terminate the easement at will.
28. When a broker misrepresents his principal's property to a buyer, he could cause his principal to be subject to: A. A court action for damages by the buyer B. A rescission of the sale by the buyer C. Civil responsibility for compensating the buyer for misrepresentation of the broker D. Any of the above
: D. The principal is responsible for his agent's actions. If misrepresentation occurs, there should be a rescission of the sale or civil court action for damages.
160. In as much as real property requires more time to market than listed securities, require more care, and comes in larger denominations, its return should be: A. About the same as from bonds B. Higher than from bonds and less than from first trust deeds C. Equal to the return from first mortgages D. Higher than that of bonds or first mortgages
: D. The return from real property should be higher than from bonds or first trust deeds because of the above factors.
79. In an escrow, prepaid rents are normally: A. Debited to the vendor B. Credited to the vendor C. Debited to the buyer D. Credited to the buyer
: D. The vendee is the buyer. The buyer normally receives the prepaid rents.
182. Real estate assets are usually acquired by using: A. The results of long term and short term gains B. The supply and demand of equity capital C. Equity funds and money market funds D. Debt funds and equity funds
: D. There are mutual funds and real estate investment trusts that do acquire real estate assets -- either debt assets (mortgage assets) or equity assets (ownership assets).
127. The broker, as agent of the seller, owes the buyer: A. Only a duty to disclose any item which relates directly to the sales price of the property B. The same fiduciary obligations he owes to the seller C. Only the duty to answer questions honestly D. The duty of honestly and fair dealing
: D. This deals with the responsibility an agent owes the buyer when the licensee is the agent of the seller. He owes the seller fiduciary obligations -- the buyer, the duty of honestly and fair dealing.
141. The following could be used by the buyer as earnest money deposit in purchasing real property: A. A promissory note secured by a deed of trust B. A postdated check C. An unsecured promissory note D. All of the above
: D. This deposit can be in any form but must be disclosed to the seller prior to the seller accepting the offer.
8. Which of the following is not a necessary element in the formation of a contract: A. Offer B. Acceptance C. Consideration D. Performance
: D. Two parties may enter into a contract, but they might not fulfill (perform) their obligations.
Exculpatory clause
A hold harmless clause that may be found in contracts relieving a party from liability for injuries to another.
Ministerial acts
Acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of active representation.
the veteran remains liable for payments unless released by the lender and VA
A Veteran obtained a VA loan to purchase a home. Subsequently the home was sold via loan assumption to a non-veteran purchaser. Which of the following statements is correct?
A, and C own property as joint tenants. C dies then B sells his interest to D. The property is now owned by:
A and D as tenants in common, each with 2 interest
Answer: B. It has not been presented or accepted by the owner. Contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker WILL generally be entitled to his or her FULL COMMISSION.
A broker and a seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract? A. there is no consideration involved B. no acceptance has been given C. no earnest money has been enclosed D. there is no current listing agreement
Answer: B. In order for a broker to collect the commission in an Exclusive Right to Sell agency listing, he must prove he was licensed at the time of sale. Note: In an Open Listing, the broker who "procures cause" gets the commission.
A broker had an Exclusive Right to Sell agency listing. In order to collect the commission, he must: A. prove he was the procuring agent B. prove he was licensed at the time of sale C. prove he has a ready, willing and able buyer that met the seller's terms D. all of the above
A
A broker is listing the property of a deceased owner who had five adult children. Two of the children are listing the property for sale. Before completing the listing agreement, the broker should do which of the following? A. Check the ownership of the record to see if the persons who are listing the property are the current owners. B. Check th deceased owner's will to verify who the heirs are. C. Require all the adult children to sign the listing. D. Require all the adult children sign a quit claim deed.
Answer: C. In order to be due a commission, the broker must produce an offer that matches the listing EXACTLY.
A broker listed a $75,000 property and the agreement read that the owner would NOT take more than a 25% cash offer. The broker produced a buyer who offered a full price 100% cash offer. Would the broker be due a commission? A. yes, bc the broker produced a ready, willing and able buyer B. yes, bc the offer was reasonable C. no, bc the broker did NOT produce a buyer that fulfilled all the terms of the listing agreement D. no, bc the broker violated the listing agreement by writing a 100% cash offer
A a separate trust account journal is maintained for each trust account.
A broker may maintain a separate trust account for each office location, provided: A a separate trust account journal is maintained for each trust account. B the Commission is advised of the name of the bank and the name of the account within fourteen days of opening the account. C the broker agrees to have the account examined by the Georgia association. D the office manager agrees to be responsible for the account.
Answer: C. Since the buyer was unable to obtain the financing, the buyer was not "able". Therefore, the fact that the seller could not give clear title was irrelevant.
A broker produces a supposedly ready, willing and able buyer. At closing, the seller is unable to provide marketable title to the property and the buyer cannot come up with the financing to purchase the home. Is the broker due a commission? A. yes, because the seller is the one who cannot produce marketable title B. yes, because he produced a ready, willing and able buyer C. no, because he did not produce a ready, willing and able buyer D. no, because he did not finish closing the transaction
C take-out commitment
A builder is most likely required by a lender to secure a: A conditional commitment. B firm commitment. C take-out commitment. D bonded commitment.
Answer: C. An amendment is when
A buyer and seller sign an agreement to change the contract to close on May 1 instead of May 2. This is a(n): A. addendum B. special stipulation C. amendment D. clause
Answer: A. A licensee can only fill in forms for those for whom the licensee is an agent.
A buyer and seller, neither of which is under contract with the broker, ask a broker to write a contract for them. What should the broker do? A. refuse to do anything because he is not their broker B. refuse to do anything unless he gets a commission C. perform his normal services and charge is usual fees D. perform his normal services and not charge a fee
Answer: A. RESPA applies to new, FIRST MORTGAGES to buy a home if the lender is associated with the federal government. An FHA loan is insured by the federal government. Loans NOT of the type bought by FNMA are usually not associated with the federal government (B). Farm loans (C) are usually not covered under RESPA as farms are more of a type of business loan. Only first mortgages (D) fall under RESPA.
A buyer applying for a loan on a two family residence would be covered under RESPA in which of the following circumstances? A. if the loan was an FHA insured loan B. if it was a loan NOT typically bought by FNMA C. if it was part of a 45 acre farm D. if it was a second mortgage
Answer: D. Writing a false contract in order to borrow money is bank fraud. Anything other than the actual sale price is fraudulent. Even if the buyer and seller agreed (A) & (C), it is still fraud.
A buyer bought a house for $40,000. In order to get the buyer a larger loan, the broker wrote up a false contract for $48,000. Would this be legal? A. yes, as long as the buyer and seller both agreed B. yes, since the lender would base the loan on the appraisal, not the contract C. no, because the seller would NOT be a party to the false contract D. no, because the loan must be based upon the actual contract sale price
Answer: D. Since there were no contingency clauses, and no restrictive covenants of record. If the buyer cannot secure a change of zoning, the contract is still valid and is enforceable between the parties.
A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executed contract. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage? A. void B. voidable C. breach D. enforceable
Answer: C. Because agreement was reached and SIGNED documents were provided on TUESDAY, Friday midnight ends the THREE-business-day period.
A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? A. tuesday, midnight B. thursday, midnight C. friday, midnight D. there is no rescission on a house
Answer: C. Even though the licensee is legally representing the seller, the licensee still has an obligation to the buyer to be fair and honest and must exercise care and diligence in performing acts for that buyer. In this case, the licensee knew of the buyer's intended use of the property, and had an obligation to either ascertain that information, or inform the buyer that she should do so herself, or through another licensee.
A buyer wants to buy a larger house and open a beauty salon in her home. She tells the listing licensee her plans and looks at property with that licensee. They find a property she likes and she makes an offer that is accepted. After closing and moving into the property, she finds out there are deed restrictions in the subdivision that prohibit a business operating out of one's home. Which of the following is true? A. The buyer was solely responsible for researching the deed restrictions before buying the property. B. The licensee was representing the seller and had no duty to the buyer to investigate the restrictions. C. Since the licensee knew of the buyer's intended use, the licensee should have ascertained whether or not the property could be used for that purpose. D. The seller was solely liable for not telling the buyer she would be unable to open a beauty shop in the property.
Answer: A. Lenders must be approved by the Federal Housing Authority before they can offer FHA loans.
A buyer wants to take out an FHA loan. The broker should refer the buyer directly to: A. any approved lending institution such as a bank or savings and loan association. B. an FHA appraiser in the area C. the Federal Housing Administration Office D. the Federal National Mortgage Association
Answer: D.
A church owns a retirement home and restricts the rental of the units to church members regardless of age, sex, race, color, or national origin. Is this policy a violation of federal fair housing laws? A. Yes, because all discrimination on the basis of religion is illegal. B. Yes, because only owners of single-family homes may discriminate on the basis of religion. C. No, because nonprofit organizations are not subject to federal housing provisions. D. No, because religious organizations may limit occupancy of dwelling units they own to persons of the same religion.
An escalator clause. (found in index lease)
A clause in a lease that would allow adjustments of payments either up or dawn would be called:
Indemnification clause
A clause in which one party agrees to compensate another for a loss or damage that is sustained.
Defeasance Clause ( release or discharge)
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, usch as cancellation of a mortgage upon repayment of the mortgage loan.( satisfaction of note fully paid)
C
A commercial back will generally: A. Insure FHA loans. B. Guarantee VA loans. C. Make short term business loans. D. Make purchase-money mortgages.
Contingency
A contingency in a contract requires the completion of a certain act or promise before the contract is binding, or it may cancel contract obligations. Depending on how it is written, a contingency can make a contract voidable or unenforceable.
Assignment
A contract (except personal services contracts) may be assigned to another party unless expressly stated otherwise in the contract
Answer: B. "loss of latches" means that one does not perform an action within a law period of time. The contractor has 90 days to record the lien from the day he started the work/day he ended work ???
A contractor had a lien on a property for the non-payment of services that he provided to build a deck. He started the job on Dec. 15th, 2001, recorded the lien on Jan. 1st of the next year, and sued the owner on Feb. 2nd, 2003. What best describes the situation? A. as long as he recorded the lien within 90 days of the completion of the job, he should prevail in the law suit. B. he loses due to loss of laches. C. he loses because he did not bring the suit before Dec. 15th of 2002. D. if foreclosure takes place, the lien is prioritized on Jan. 1st, 2003.
Agency
A contractual relationship whereby one person represents another. Seller & Broker
Cooperative
A corporation holds title to the property. The tenants receive shares of stock in the corporation and a proprietary lease that grants occupancy of a specific unit in the building.
Answer: B. Deed restrictions are enforced through a court. If a neighbor sees a violation of a deed restriction occurring, or about to occur, the neighbor could apply for a court injunction against the owner's plans. This is usually done by the homeowners' association (HOA), but an individual property owner has the right to do so as well. The playground is not community property. The property belongs to the individual owners, but the deed restrictions have created the playground and are enforceable.
A deed restriction in a subdivision created a community playground that used a few square feet from the rear of every owner's lot. An owner has begun making plans to convert the rear half of his lot to a garden. The plans would require the removal of park equipment. A neighbor objects to these plans. The neighbor should A. do nothing since an individual landowner has no authority to enforce deed restrictions. B. apply for a court injunction against the owner's plans. C. inform the owner that the playground is community property. D. file a lis pendens as soon as possible.
selling the property prior to foreclosure; giving the lender a deed in lieu of foreclosure
A delinquent borrower may attempt to avoid foreclosure by:
Earnest Money
A deposit to show good faith; a down payment. (Good faith money, Binder Money, Pre-arranged damages). Does not have to be part of contract. Affliliate must giove to broker ASAP. Broker mst deposit into trust account immediately.
Growing Equity Mortgage
A fixed rate mortgage on which the monthly payments increase over time according to a set schedule. The interest rate on the loan does not change, and there is never any negative amortization. In other words, the first payment is a fully amortizing payment. As the payments increase, the additional amount above and beyond what would be a fully amortizing payment is applied directly to the remaining balance of the mortgage, shortening the life of the mortgage and increasing interest savings.
B transact the principal's affairs in a certain business
A general agency empowers the agent to: A transact matters of all types for the principal. B transact the principal's affairs in a certain business. C perform only specific acts for the principal. D perform any legal act for the principal.
Answer: B
A home is listed at an inflated price and requires all minority prospects to pay that price. However, if a lower price is accepted from a non-minority prospect, this practice: A. does not violate Fair Housing Laws because the home is still being made available to minority prospects B. subjects the seller and the seller's agent to liability for money damages under a Fair Housing suit C. is a violation by the seller only D. is illegal only if the purchase of the house is being financed through FHA or VA
Answer: C. $252 × 12 (months) = $3,024 $3,024 ÷ 33,600 = 9% Annual Rate
A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan? A. 5% B. 7% C. 9% D. 11%
a license
A land owner had a small lake totally enclosed within the land. The owner told a neighbor to feel free to fish in the lake anytime he wished. the neighbor has:
C Surrender and acceptance
A landlord and tenant's mutual agreement to cancel a lease is best described as: A release and surrender. B rescission and acceptance. C surrender and acceptance. D None of the above.
A protective covenant
A lease provision which prohibits using certain premises for a drugstore is called a: A protective covenant. B use covenant. C restrictive covenant. D condemnation covenant.
Estate at will or tenancy at will
A lease that gives the tenant the right to possess the property with the consent of the landlord for an uncertain period of time. The lease can be terminated at any time by the landlord or the tenant giving proper notice to the other party. Death of either party terminates the lease.
Estate for years or tenancy for years
A lease with a definite time period or specified beginning and ending dates. This terminology is deceptive in that a lease may substantially less than a year. No notice is needed to terminate the estate. A tenant who remains in possession after expiration is considered a holdover.
Estate from period to period. Estate from year to year/ Periodic tenancy
A lease with an indefinite time period. The lease automatically renews until proper notice to terminate is given.
Answer: (A) - tenancy for years
A leasehold estate that has a definite beginning and ending, cannot be renewed, and requires no notice to terminate is a: A. tenancy for years B. tenancy at will C. periodic tenancy D. tenancy at sufferance
Answer: A. A lender would require a blanket mortgage if the borrower was going to use several unencumbered properties as security.
A lender would require a blanket mortgage in which of the following circumstances? A. if the borrower was going to use several unencumbered properties as security B. if there was a mortgagee clause stating that upon default, it would become a general lien C. if the lender made the loan to encompass all of the borrower's debts D. none of the above
Answer: D. The licensee needs to be sure the persons who are listing the property are the owners of record. If they are not the owners of record, they do not have the right to sell the property.
A licensee is listing a rural property. The property was owned by a woman who is now deceased. The woman had six grown children. Two of the sons are listing the property for sale. Before completing the listing agreement, the licensee should do which of the following? A. Check the woman's will to ascertain who the heirs are. B. Require all six children to sign quitclaim deeds. C. Have the woman's attorney sign a release of title. D. Check the ownership of record.
Answer: B. The licensee presented information as being factual but did not verify it. If it is incorrect and the buyers are damaged due to their reliance on that information, whether it is oral or in writing, the licensee can be held responsible for misrepresentation.
A licensee is representing prospective buyers. The licensee orally informed the buyers that the developer would be paving the streets in front of a house in a rural subdivision. The licensee had not verified this but assumed that it was true because the developer had done the paving in similar subdivisions. The buyers relied on the licensee's statement in deciding to buy the house. If no contract exists spelling out paving responsibilities, who can be held accountable for damages? A. the developer because it is a developer's responsibility to pave streets up to existing arteries B. the licensee because his unverified statement was misrepresentation C. the county because it has jurisdiction over roads in rural areas D. no one because no written promise of street-paving was made by either the licensee or the developer
an encumbrance affecting title to the property
A lien is best described as:
a freehold estate
A life estate is classified as which of the following?
Answer: C. Under RESPA guidelines, "referral fees" are considered illegal kickbacks.
A loan company was referring loan applicants to a particular insurance company, which in turn paid the loan company a referral fee. This is: A) legal, as long as it is a set fee and not based on the amount of business referred. B) legal, as long as the loan company does not require a loan applicant to purchase insurance from a particular company. C) illegal, since the Real Estate Settlement Procedures Act prohibits kickbacks. D) illegal due to the Truth in Lending Law (Regulation Z)
a construction loan
A loan in which portions of funds are released as improvements are completed is known as:
Answer: (B) - straight term loan
A loan in which the buyer pays off the total principal at the end of the loan is a: A. partially amortized B. straight-term C. principal + interest D. amortized loan
a graduated payment loan (GPM)
A loan which provides for the borrower to make smaller payments initially and to compensate later by making larger payments is called:
Answer: C. We know the total square yardage as well as the frontage expressed in feet. Since area is a function of length times width, and since there are 9 square feet in each square yard, we know that 40 times X divided by 9 will give us our answer. To make the calculation, multiplying 920 yards by 9 will allow us to divide the result by 40 to find the depth, which is 207 feet. OR: 40 × ___ = 920 920 ÷ 40 = 23. 23 × (9) = 207 feet
A property had an area of 920 square yards with a 40-foot frontage. What was the depth of the lot? A) 23 feet B) 69 feet C) 207 feet D) 408 feet STATE!
Answer: B. Start with the loan balance of $21,000, and multiply it by 11% to get the annual interest paid of $2310. Divide that number by 12 to get the monthly interest amount of $192.50. Subtract that amount from the total principal and interest payment of $571.80 =$379.80 principal paid on June 1st in arrears for the month of May. Subtract $379.30 from the prior loan balance of $21,000, for a total of $20,620.70, and 1% of that is 206.
A loan with a balance of $21,000 prior to the June 1 payment was figured with interest at 11% annually and monthly principal and interest payments of $571.80. There was a 1% pre-payment penalty. The owner paid the June 1 payment and then paid off the balance of the loan. What was the pre-payment penalty? A) $204 B) $206 C) $210 D) $215
Answer: A. 475 x 525 = 249,375 square feet. 249,375 ÷ 43,560 = 5.7248 acres. $275,000 ÷ 5.7248 = $48,036
A lot that measures 475' x 525' sold for $275,000. What was the cost per acre? A. $48,036 B. $48,238 C. $48,568 D. $48,976
Answer: (A) - Buyers market
A market where there is excess supply over demand is knows as a: A. buyer's market B. broad market C. seller's market D. thin marker
C tenants by the entireties
A married woman and an unmarried man may not own real estate as: A tenants in common. B joint tenants. C tenants by the entireties. D general partners.
Answer: D. A metes and bounds description must contain a beginning point and end at the same point, thus enclosing the parcel of land being described. A metes and bounds description must be based on landmarks or monuments.
A metes and bounds description must contain which of the following? A. at least one artificial monument B. a baseline from which measurements are taken C. a lot and block number assigned to it in the county recorder's office D. a point from which the description begins and at which it ends
Answer: (D) - Metes and Bounds
A method of describing land using points, angles, and distances is which of the following? A. Rectangular Survey B. Measurement by leaps and bounds C. Plat of survey or Lot and Block survey D. Measurement by Metes and Bounds
Answer: A. Mortgage brokers function much like independent insurance agents agents and represent a variety of lenders. Their role is to match the circumstances of the individual buyers with the mortgage program best suited to their needs.
A mortgage broker: A. arranges loans between borrowers and investors B. is a lender C. buys mortgages in the secondary mortgage market D. buys mortgages and resells them at a profit
Purchase money mortgage
A mortgage issued to the borrower by the seller of the home as part of the purchase transaction. This is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels. This is also known as seller or owner financing.
may seek a judgement against the debtor or the difference
A mortgage loan had an outstanding balanc of $58,500 at the time of foreclosure. The encumbered property sold for $57,000 at public action. The lender:
Answer: B. Subordinate financing is any mortgage or other lien that has a priority lower than the first mortgage
A mortgage or other type of lien that has a priority lower than that of the first mortgage is called A. a second mortgage B. subordinate financing C. first subordinate financing D. all of the above
Answer: C. A mortgage secured by both real and personal property is called a Package Mortgage.
A mortgage secured by both real and personal property is a(n): A. blanket mortgage B. wraparound mortgage C. package mortgage D. open-end mortgage
to force a division of property without all the owners' consent
A partition suit is used for which of the following?
Universal agent
A party is given full power of attorney to represent another person. Example: a guardian of a minor or incompetent person.
Answer: B. The initial investment was $66,000 (3 lots at $22,000 each). The developer divided them into four lots and sold them for $18,000 each. $18,000 × 4 = $72,000 in sales; $72,000 - $66,000 = $6,000 (dollar amount of profit). The percentage of profit is always based on the original investment. The dollar amount of profit divided by the original investment will equal the percentage of profit (Part ÷ whole = rate): $6,000 ÷ $66,000 = 0.09 (9% profit).
A person bought three lots for $22,000 net each and divided them into four lots of equal frontage. The lots were then sold for $18,000 each. What was the approximate percentage of gross profit? A. 3% B. 9% C. 12% D. 33%
D Patent
A person homesteading in the Indian territories received ownership of the land by means of what document? A Treaty. B Land Grant. C Quit claim deed. D Patent.
Answer: A. A deed in lieu of foreclosure does protect a person's credit rating better than an actual foreclosure. (B) A deed of reconveyance is a document a lender gives to a buyer when a loan is completely paid off. (C) An alienation clause in a mortgage calls the loan balance due and payable upon selling the property. (D) The defeasance clause in a mortgage voids the security once the loan is paid off.
A person who owned a house ran into financial difficulty. Foreclosure on the house appeared to be a possibility. Which of the following actions should this person take in trying to protect the person's credit rating in the future? A. ask the lender for a deed in lieu of foreclosure B. ask the lender for a deed of reconveyance C. exercise the alienation clause in the mortgage D. exercise the defeasance clause in the mortgage
Deficiency Judgement
A personal judgement levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full
Answer: C - A planned unit development (PUD) is a type of ownership where individuals actually own the BUILDING or UNIT they live in. In a condominium, an individual owns the AIRSPACE of his unit.
A planned unit development (PUD) is different from a condominium because A. a condominium usually has more amenities B. there are fewer units in a condominium development C. in a condominium the individual owns the airspace of the unit D. all of the above
C the lender's evidence of a loan
A promissory note is: A the lender's security for a loan made to finance the purchase of the property. B one guaranteed or insured by a government agency. C the lender's evidence of a loan. D automatically secured by a mortgage when signed by the property owner.
C
A property manager's compensation would most likely be based on all of the following EXCEPT: A. A percentage of the gross income. B. A percentage of the net income. C. The standardized fee in the market place. D. A fixed fee negotiated between the agent and the principal.
B
A property manager's fee is generally determined by: A. An agreement with the tenants. B. A flat fee or percentage of gross rental income. C. A standard fee schedule agreed on among property management companies. D. A percentage of the gross selling price.
B the board of arbitartion
A property owner who feels the amount of an ad valorem tax is unfair should appeal to: A the tax assessor. B the board of arbitration. C the courts. D the state board of equalization.
Answer: (B) - Subrogation
A property owner's signing over rights in a claim to the insurance company in return for receiving an insurance is an example of: A. subordination B. subrogation C. defeasance D. alienation
Answer: C. A purchase money mortgage is a loan made by the SELLER in a transaction.
A purchase money mortgage is a loan made by: A. a lender on the Secondary Mortgage marker B. a Fannie Mae approved lender only C. the seller in a transaction D. the purchaser in a transaction
Answer: A. A lease is a legal and binding contract. Although preprinted lease agreements are often used in residential leases, commercial leases are more complex. Drafting a commercial lease may constitute the practice of law, and a real estate licensee cannot practice law unless also a licensed attorney.
A real estate licensee was hired by a property management company to lease and manage commercial properties. Each commercial lease was different based on the negotiations of the parties. Which of the following is true in these circumstances? A. Legal counsel should be sought to write or review the leases. B. The licensee can prepare the leases as he is trained in real estate. C. The licensee could fill in the blanks on preprinted commercial lease forms. D. A lease agreement is not the same as a contract and can be prepared by either party. commercial lease forms.
Answer: D. The salesperson does not have to offer the property through his broker's company
A real estate salesperson intends to offer for sale a tract of land he inherited without listing it with a real estate brokerage company. Which of the following in NOT TRUE concerning the marketing of this property? A. the salesperson must notify the broker in writing of his intention to sell the property B. in order to advertise the property, the salesperson must have his broker's written consent to do so C. in advertising the property, the advertisement must state, "Owner is a licensed real estate agent acting as a principal." D. the salesperson must offer the property through his broker's company. He may not advertise the property except as a listing of his company.
D a lein
A right or claim of a creditor to have a debt satisfied from the proceeds of the sale of the debtor's property in the event of default is: A an attachment. B a judgment. C a writ of execution. D a lien.
Answer: D.
A salesperson must do which of the following regarding rental property he just bought and plans to manage personally? A. advertise the rental property under the name of his broker's company. B. require the first and last month's rent as a security deposit from each tenant C. make certain that all advertisements on the property include price, location, size, and the type of lease to be used D. obtain his broker's approval of the trust account used for any security deposits received
Answer: B. When the closing takes place, the terms of the contract have been fulfilled and it expires automatically.
A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15, when did the listing expire? A. 26-May-04 B. 15-Jun-04 C. 26-Aug-04 D. 15-Dec-04
Answer: D. Anytime you see the words, "Seller wants to net" or "After paying a commission" the problem must be done in the following order: 1. Add expenses (closing costs, mortgage) to what the seller wants to net. 2. Subtract any refunds (prepaid rents, insurance assumption) due to the seller. 3. Divide the amount above by the aggregate of the commission. (100% minus 7% =93%) So in this problem $55,350 + 450.00 =$55,800 divided by 93% = $60,000.00 Using your % key will be a big help if you do not like to convert % to decimals, the process is done for you internally in the calculator.
A seller netted $55,350 after closing expenses of $450 and a 7% commission. What was the sale price? A) $56,048 B) $58,232 C) $59,516 D) $60,000 STATE!
Answer: (B) - Exclusive right to sell listing
A seller wants to list the property with a broker, but wants to avoid paying any commission should the seller be fortunate enough to sell the property himself. Which of the following should the seller avoid signing? A. an exclusive agency listing B. an exclusive right to sell listing C. an open listing D. all listings
No, because they are part of the realty
A seller, Jane Jones, had prize rose bushes in her yard. They were not mentioned specifically in the sales contract. Two days before closing, she removed them. Was this lawful act?
Answer: D. At 8%, the annual interest on $13,400 is $1,072 or $89.33 per month. Total payments of $3,752 divided by the monthly payment equals forty-two months.
A straight note for $13,400 was executed at 8% annual interest. If the borrower actually paid $3,752 in interest, how many months did he take to pay it off? A) 32 B) 36 C) 39 D) 42
Answer: C. A complaint to the community association is often enough to convince the owner to remove the tree house. Failing that, however, the court will enforce the requires on a single complaint.
A subdivision has a deed restriction that does not allow tree houses. An architect moves into the subdivision and builds a tree house in the back yard. How many neighbors will it take to enforce the deed restriction and what action should be taken? A. 75% of the neighbors must sign a petition that will be given to the local zoning board. B. Only 1 neighbor needs to take action through the local zoning board. C. Only 1 neighbor needs to take action through a court action. D. 75% of the neighbors must take action through a private court action.
Community property
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage.
Estate at sufferance or tenancy at sufferance
A tenancy created when a tenant remains in possession of the property without the consent of the landlord after the lease expires. If the landlord gives permission to a tenant to remain on the property after the expiration of a lease, the tenant may be treated as a holdover, and a tenancy at will or periodic tenancy may be created.
Answer: B.
A tenant had a one year lease which expired. The tenant stayed in the home past the expiration and continued to pay the rent in which the landlord accepted. This type of lease would be called: A. an estate for years B. a periodic tenancy C. a tenancy at sufferance D. an easement by prescription
C
A tenant has a five year lease. The tenant dies after three years. Is the lease binding on the tenant's heirs? A. No, death of either party terminates a lease. B. No, leases are not inheritable. C. Yes, contracts pertaining to real estate are binding on the heirs of the deceased. D. Yes, only if the lease is a tenancy at will.
Answer: C.
A tenant has an estate for years and vacates the property at the specific ending date. The landlord refuses to return the security deposit because the lessee did not give him notice. Is the landloard's action correct? A. Yes, an estate for years requires a 30 day notice B. Yes, an estate for years requires a 60 day notice C. No, no notice is required D. No, security deposits cannot be held for breach of lease.
Answer: C. Base rent amounts to $18,000 per year. Subtracted from the $30,000 total rent, it yields a further $12,000 that came from the 3% of sales portion of the agreement. $12,000 divided by 3% is $400,000, plus the first $200,000 that was exempt from the surcharge, means the company had total sales of $600,000.
A tenant rented a store to use as a real estate school at a base rent of $1,500 a month. Additionally, the tenant agreed to pay 3% of gross annual sales over $200,000. What were the gross sales if the total rent paid for the year was $30,000? A) $400,000 B) $150,000 C) $600,000 D) $750,000
the tenant can do with the rugs as he/she pleases
A tenant rents property and buys room size rugs. The owner than mortgages the property after the tenant lays the rugs down. This means
a trust deed
A three-party instrument which transfers title to the third party as security for a debt owed by the first party to the second party is known as:
Answer: A. Since the trustee in this case is acting on behalf of the true owner of a property, he holds a "naked title," meaning a title without the usual rights of ownership.
A trust deed gives the lender a right to request that the trustee perform certain tasks in order to fulfill the terms of the trust. The trustee may take action in those circumstances because he holds: A) naked title. B) equitable title. C) reversionary title. D) public title.
Answer: A.
A warehouse property is expected to generate net operating income of $250,000 per year. If similar buildings are currently selling at an 11 percent cap rate, what would you estimate to be the market value of this building? A. $2.27 million B. $22,700 C. $2.75 million D. $27,500
D the local public school system could probably give you that information
A white family is looking at homes and happens to notice some black children playing in a nearby park. They ask you what percentage of the people in the neighborhood are black. Your best response might be: A that is something we never discuss. B there are not enough to matter. C I think it is around ten percent. D the local public school system could probably give you that information.
Answer: C. It's common for zoning ordinances to regulate the kinds of animals that may be kept. For example, in urban and heavily populated suburban areas, housepets only may be allowed. In more country-like settings, only housepets may be allowed in one zoning category, while housepets and horses in another. Other than zoos and wilderness areas, cougars are out of luck when it comes to being welcomed into the community.
A woman bought a house and wanted to bring along her pet cougar to keep in the backyard. Which would most likely keep her from doing this? A) Police power, because the police have authority over types of animals for pets. B) Urban development regulations, since they list allowable animals for the properties. C) Zoning ordinances, because sometimes these contain which animals may be kept. D) Building codes, since they would contain the most restrictions for city dwellings.
Answer: A. For example, let's say Barney is expecting a big promotion in six months and wants to buy Fred's house for $300,000 if it comes through. In exchange for keeping his home off the market for six months and agreeing to sell it to Barney for $300,000 at Barney's option, Barney gives Fred $3,000. The $3,000 is Fred's to keep no matter what. However, Barney is not obligated to buy Fred's house; it's his choice. Further, if he does get the promotion and wants to exercise his option, Fred must sell Barney his home for $300,000, even if market conditions have now made it worth more.
A(n) _______ is when an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants the right to purchase the property within that period for a stated price. A) option B) contract of sale C) right of first refusal D) installment agreement
Answer: D. ABC Incorporated would take title in Severalty.
ABC Incorporated was organized with five stockholders. How would ABC Incorporated take title to property? A. tenants in common B. tenants by the entirety C. joint tenants D. severalty
Executed Contract
ALL promises completed
TAXES
ASSESSED VALUE x MILLAGE RATE= TAXES
D Qualified
Acceptance of an offer will not create a binding contract if the acceptance is: A absolute. B complete. C unconditional. D qualified.
the lender has given the borrower a good faith estimate of closing expenses
According to the Real Estate Settlement Procedures Act, the Uniform Settlement Statement must be used at closing when:
Time is of the essence
Action must be done by noted time
AMA
Active management area
AMA
Active managment areas
Ministerial Acts
Acts licensee may preform but does not rise to level of active representation
Two Ways to Terminate Listing
Acts of Parties and Operation of Law
D Any or All of the above
Actual fraud may consist of: A an untruth spoken by a person who knows or believes otherwise. B silence such as to conceal the truth. C the mere suggestion that something is true which the person making the suggestion does not believe to be true. D Any or all of the above.
Which of the following statements regarding tenant improvements (TIs) is the least true in the context of commercial real estate leases?
Actually, both b. and d. are equally untrue.
ARM
Adjustable Rate Mortgage
When can affiliates seek legal advice?
Affiliates can only seek legal advice when directed to do so by their broker.
Who can represent broker?
Affiliates. Only as observers.
Specific performance
After a sales contract is created and contingencies are met, the sales contract is enforceable, meaning that if the buyer or seller defaults, the other party can file a suit for specific performance to enforce the terms of the contract.
Enforceable Contract
After contract created & contingencies met contract is enforcable
Suit of Performance
After contract is enforceable buyer or seller defaults this can be filed to enforce terms (generally if seller breaches contract)
Buyer's Broker Agreement
Agency agreement between Buyer & Broker
Express or implied
Agency relationships can be either of these.
Exclusive Agency
Agency with Broker where owner can sell the property and not pay comission
Brokerage
Agent
Special Agent
Agent hired by principal to perform a single act. In real estate, broker is special agent hired by seller to find ready, willing, able buyer
Sub Agent
Agent of an agent
Dual Agency
Agent represents two principals in the same transaction. Must be in writing.
Community Association Managers
Agent to Broker. 25 hour course
Salesperson
Agent to Broker. 75 hour course
Associate Brokers
Agent to broker. Pass Broker test. 60-hour course. Licensed for 3 years
Active Licensees
Agents. Include: Brokers, Associate Brokers, Salespersons, Community Association Managers, Afflitiates
Affiliates must notify their broker of:
All Real Estate Activities
Executed Contract
All duties fulfilled, purchase paid, deed conveyed at closing
Amortized Note
All interest and principal paid over the term. Constant payment but Interest goes down and Principal goes up over the term.
Answer: D.
All of the following are duties of the property manager EXCEPT: A. reporting to the owner all notices of building violations. B. providing upkeep and maintenance on the property. C. maintaing financial records and accounts. D. securing tenants of a particular ethnic origin in accordance with the owner's wishes.
A conditional fee estate
All of the following are less than freehold estates EXCEPT: A conditional fee estate. B estate at sufferance. C estate at will. D periodic estate.
Answer: C. Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender. There are no state-mandated qualifying requirements for conventional loans.
All of the following are true of conventional loans except what? A. they are made to the buyer without governmental insurance or guarantee B. the policy requirements of the lenders are not uniform C. the requirements to qualify are uniformly fixed by state law D. they require a higher downpayment than non-conventional loans.
D an easement may be revoked at will by the servient landowner
All of the following can be characteristics of an easement, except: A an easement creates an interest which may be protected from third party interference. B an easement can be created by conveyance. C an easement is an incorporeal right in the land of another. D an easement may be revoked at will by the servient landowner.
A interest on a mortgage loan
All of the following items are usually prepaid EXCEPT: A interest on a mortgage loan. B hazard insurance premiums. C a tenant's rent. D security deposits.
A Estate for years
All of the following require written notice to terminate EXCEPT: A estate for years. B estate from period-to-period. C estate at will. D All of the above.
Offers
All offers must be presenter to the client
Executed Contract
All parties have fulfilled their duties
Executed contract
All parties have fulfilled their duties and responsibilities. Becomes fully executed at closing when the deed has been conveyed and the buyer has paid full price.
D statue of limitations
All the following will discharge the contractual obligations EXCEPT: A performance. B destruction. C agreement. D statute of limitations.
Bundle of rights
Allows the owner to possess, enjoy, control, exclude, and dispose of the property.
Straight Note
Also called Term Loan. Interest only paid through the duration of the term with a baloon payment for the borrowed amount
ALTA
American Land Title Association
ALTA
American Land Title Association insurance
ADA
Americans with Disabilities Act
Answer: C. FHA loans, which are actually government guarantees of payment to lenders rather than actual loans, are intended to help low and middle income families enter the housing market by providing low down-payment options.
An FHA 203 loan was applied for by a buyer. What was the purpose in seeking this type of loan? A) low interest rates with accelerated payments B) faster equity build-up C) small down payment D) shorter period of amortization
Universal Agent
An agent authorized to do everything that can be lawfully delegated to a representative.
Answer: C. If the complaint is not filed within one year, a person may still file a civil suit in a Federal Court.
An aggrieved party with a Fair Housing violation claim has how long to file a complaint with the Department of Housing and Urban Development? A. 1 month B. 1 week C. 1 year D. 7 years
Lease
An agreement that transfers exclusive possession and use of real estate from the landlord/owner/lessor to the tenant/lessee.
C the applicant took the exam
An applicant passing the salesperson's licensing examination has three months to apply for their license (without paying double fees) from the date: A the applicant filed an application to sit for the examination. B the Commission advised the applicant that he/she passed the examination. C the applicant took the examination. D the applicant completed the educational requirement.
Answer: C - An assessment places a value on property for the purpose of taxation.
An assessment does which of the following? A. places a value on property for the purpose of real estate sales B. is the same as a competitive marker analysis C. places a value on property for the purpose of taxation D. is usually carried out by the mayor of a town
A expression reservation
An easement may be created by: A express reservation. B merger. C abandonment. D all of the above.
prescription
An easement that is acquired by constant, hostile use is called and easement by
Tenancy at will
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of the state is indefinite.
Absorption rate
An estimate of how quickly homes have sold in the neighborhood within the last year.
Answer: A. An appraisal is the process that APPRAISES the value of a property. Don't confuse this with a survey, which measures boundaries and land areas; or an assessment, which imposes TAX on something. A lien is a financial encumbrance.
An estimate of the value of something, usually a property, is known as: A) an appraisal. B) an assessment. C) a survey. D) a lien.
Answer: B. When there is more mortgage money in the market place "looking for a home," borrowers have more choices, which leads to increased competition among lenders, which leads to lower interest rates.
An increase in the availability of money would lead to which effect? A. interest rates would go up B. interest rates would go down C. interest rates would NOT be affected due to RESPA guidelines D. interest rates would NOT be affected due to Truth In Lending
Answer: C. 9% of $7,000 is $630 interest per year $945 divided by $630 equals 1.5 years (1.5 years = 18 months). loan amount x interest rate = ann. interest 7,000 x 9% = 630 annual interest 945 ÷ 630 = 1.5 years (18 months)
An individual borrowed $7,000 on a straight note at 9% interest. If the total interest paid on the note was $945, what was the term of the loan? A. 12 months B. 16 months C. 18 months D. 20 months
Estate for years
An interest for a certain definite period of time.
Form 8300
An irs form used to report receiving more than $10,000 cash in a trade or business transaction.
Answer: D. The broker's fee is earned when the option is exercised.
An option was given on a home for consideration of $1,000. When would the broker's fee be earned? A. it was earned when he brought the optionor and the optionee together B. the broker's commission would come off the $1,000 fee C. half of the commission is earned now and half when the option is exercised D. none of the above
Answer: A. It is up to the optionor (seller) to finish the transaction. The optionee (buyer) does not have to complete (close) on the property, but would lose whatever option monies (earnest money) that have been deposited.
An option: A. requires the optionor to complete the transaction B. gives the optionee an easement on the property C. does not keep the offer open for a specified time D. makes the seller liable for the commission
Answer: C. Regulation Z (Truth in Lending) requires disclosure of all financing terms and conditions if a low interest rate, downpayment, or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies ONLY to institutions, NOT individuals selling their own home.
An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be violation of the Truth in Lending Act? A. Yes. Acreage is not exempt from Reg. Z B. Yes--since a down payment was stated C. No. Owners are not covered by Reg. Z D. No. Brokers can advertise the down payment
Answer: C. A new owner must honor the current tenant's lease rights in a property.
An owner and tenant signed a one year lease agreement. The owner sold the property to a buyer 4 months later. The buyer wanted to move into the property immediately. The original lease contract signed by the seller and tenant was silent on this point. Can the buyer of the property move in immediately? A. yes, because the lease contract was silent on the issue of the owner B. yes, because the tenant's rights are terminated upon the selling of the property C. no, because the tenant can stay in the property for the duration of the original lease contract D. no, because the tenant has an automatic right of first refusal on the property
A $157,900
An owner desires to net $147,600 from the sale of her home. Broker Baily accepts the listing with a 6.5% commission. The list price will be? A $157,900 B $157,200 C $138,000 D $227,100
Answer: D. Since the seller was declared legally insane, he was no longer qualified to be party to any kind of contract and it was automatically rendered void.
An owner listed a property with Broker Dole on May 1. On July 1, the owner was declared legally insane. The broker brought a full price offer on July 3 to the seller, which he accepted. How much commission is Broker Dole due? A) the full commission, as he brought in a ready, willing and able buyer B) the full commission, as the seller accepted the offer C) no commission, since the property was sold within the protected period D) no commission, since the listing was terminated when the owner was declared legally insane
Littoral Water rights
An owner whose property abuts tidal waters(i.e oceanfront) owns the land to the mean low water line or 100 rods below mean high water, whichever is less. The land between low water and high water is reserved for the use of the public by state law and is regulated by the state.
Answer: C. $37,231.60 + 526.40 = $37,758. (100 - 75%) = 93% 37,758 ÷ 93% = $40,600
An unencumbered residence was sold. The closing expenses amounted to $526.40 plus a commission of 7%. The seller received a closing check in the amount of $37,231.60. What was the selling price? A. $39,800 B. $40,426 C. $40,600 D. $41,110
Answer: C.
An unlicensed assistant cannot: A. assemble contracts and other documents B. place signs on the property C. show property D. check on loan commitments
labor and materials but not travel
An unpaid workman wishes to tile mechanics lien for materials, labor and travel expenses. The workman can file for:
Ambiguities
Any ambiguities in a contract are construed against the writer of the contract. Contract terms must be clear and definite.
Encumbrance
Any claim, lien, or liability that affects the value or the use of the property.
Capital Improvement
Any improvement that is made to extend the useful life of a property or to add value
Answer: (C) - a felony
Any person violating the anti-trust laws is guilty of: A. a misdemeanor B. a violation of the Federal Fair Housing Law C. a felony D. fraud
Personal Property
Anything not considered real property - Bedframe
Capital Asset
Anything we own and use for personal pleasure or gain
Can Spam Act 2003
Applies to e-mail and faxes. (1)Non-deceptive subject lines. (2) A valid physical postal address. (3) A clear and conspicuous "opt-out" provision where the recipient is not required to pay a fee. (4) The "opt-out" request must be honored within 10 days.
Law of agency
Apply to the responsibilities and obligations of a person who acts for another.
Designated Agent
Appointed by broker to act for a specific client/principal. eg. used when one agent of company listed property and another agent in same company secured the buyer.
The right of ingress and egress is best associated with:
Appurtenant
ADEQ
Arizona Department of Environmental Quality
ADRE
Arizona Department of Real Estate
ADWR
Arizona Department of Water Resources or AZ Developers Water RIghts
appraisal of value for tax purposes by an assessor representing the municipality in which the property is located
Assessment
The officer who has the responsibility of determining the assessed valuation of land, improvements, and personal property used in business.
Assessor
Affiliates
Asssoc. Broker and salespeople (antyone under broker)
A fifteen days
At a closing to take place on June 16th, the purchaser's charge for prepaid interest on a new loan will be for: A fifteen days. B forty-six days. C thirty-one days. D fourteen days.
Who conducts closings in GA?
Attorneys
counting days at closing
Bad B- buyer a- Add a d- dat sac S- seller A- accrual C- closing date belongs to seller
Trust Account
Bank account to hold other people's money
B There is no contract
Ben and Will are both mistaken as to the parcel of land which Ben is buying from Will. Under these circumstances: A they each have a voidable contract. B there is no contract. C they each have an unenforceable contract. D each is technically guilty of constructive fraud against the other.
Answer: C. Unless also an attorney, licensees should never provide legal advice. Also, while landlords will often ask agents to find back-up offers while a lease or letter of intent is pending, it is not done as a matter of course.
Beth is a broker engaged by a landlord. Which of the following is included in her responsibilities? A. advising the landlord of legal matters pertaining to his property B. keeping all information provided by the landlord confidential C. the timely accounting for all money and property she receives in which the landlord may have an interest D. always seeking additional offers even after a lease or letter of intent has been received
HOA Agency
Between Association and Broker
Property Management Agency
Between Owner & Broker regarding managing a property
Employment Agreement Agency
Between Salesperson & Broker
Bilateral
Both parties are obligated to preform
Executory Contract
Both parties have duty to perform eg. listing agreement; finding buyer & seller cooperating/pay commission. (most are executory)
Bilateral Contract
Both parties obligated to perform eg.
Answer: A. Since each broker represents separate sides in the transaction, no relationship exists.
Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller, and the listing broker? A. there is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer B. customer C. agency D. dual agency
Answer: A. This would be Dual agency because Jones is assisting both parties through a WRITTEN agreement. Note: If broker Jones was providing assistance to both parties and only performing ministerial acts WITHOUT having a written agreement - Answer: C.
Broker Jones is providing assistance to both seller Smith and buyer Cline by performing only ministerial acts through a written agreement. This is best referred to as: A. dual agency because Jones is assisting both parties through a written agreement B. designated agency because Jones is representing both parties through a written agreement C. transaction brokerage with both parties D. single agency with Smith only
Answer: B. A voidable contract is one that is able to be voided because Mrs D was under duress or undue influence.
Broker K arrives to present a purchase offer to Mrs. D, an 80 year old invalid who is not always of sound mind, and finds her son and her daughter-in-law present. In the presence of Broker K, both individuals persistently urge D to accept the offer, even though it is much lower than the price she has been asking for her home. If D accepts the offer, she may later claim that: A) Broker K should not have brought her such a low offer for her property. B) She was under undue duress from her son and daughter-in-law, and, therefore, the contract is voidable. C) Broker K defrauded her by allowing her son and daughter-in-law to see the purchase offer he brought to her. D) Her consumer protection rights have been usurped by her son and daughter-in-law.
Encumbrances
Burdens/limits title or rightss held by someone else. Types include: liens, deed restrictions, easements.
Optionee
Buyer - can sell or assign option
Answer: (B) - special agent
Buyer Burke had authorized Broker Rand to purchase a property on his behalf. What kind of agent is Broker Rand? A. general agent B. special agent C. universal agent D. secret agent
When a sale and leaseback occurs
Buyer is landlord
Exclusive Buyers Agency
Buyer is legally bound to pay the agent when there is a buyer to purchase the property
Equitable Title
Buyers interest in property
Who ultimately determines value?
Buyers/sellers
Implied Contract
By the parties actions or conduct they enter into a contract. eg. purchase at restaurant, service of taxi
The highest form of an estate wold be:
Fee simple
FHLMC
Federal Home Loadn Mortgage Corp.
FHA
Federal Housing Administration
FNMA
Federal National MOrtgage Association
FED
Federal Reserve
The law of agency requires what fiduciary responsibilities?
COLD AC Care: expert through transaction except legal or tax advise. Negotiate, refer to lenders & inspectors, deliver docs, etc. Obedience: act on good faith and obey unless illegal request Loyalty: principal interest above all others Disclosure: keep informed of property defects, buyer/seller will go higher or lower Accounting: accounting for earnest/funds Confidentiality: not disclosing information
Simple Interest
Calculate the Interest of every month, based on new loan balance. (Loan balance x Int Rate = Int/yr then divide by 12 to get int/month) Payments are made in arrears
When a lease is assigned, this is true:
Can be done without the lessor's approval
Open Buyer Agency
Can use whoever. The one who finds the property gets paid
Community Association Management
Cannot list or sell, 25 hour course, High school/GED, 18 yrs, mandatory for condos
Income approach types
Capitalization and Gross Rent Multiplier
Answer: A. If a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination.
Carl Chauvinist, the owner of an apartment complex, lives in one unit of a triplex and routinely refuses to rent either of the other two units to a female. Can he do this? A. yes. he may do this if he does not use a broker or discriminate in advertising B. yes. he may do this if he doesn't ask the tenant's age C. no. carl can never discriminate on sex. D. no. carl must live in a single family home to discriminate
A possession and interest
Certain unities are necessary for the creation of a joint tenancy. They are: A possession and interest. B place and time. C time and survivorship. D survivorship and possession
CRV
Certificate of Reasonable Value
CPM
Certified Property Manager
Amendments
Changes to the original contract. Must be approved, signed (or initialed) and dated by all parties
Methods a principal can pursue damages for non-performance?
Civil action or file complaint with real estate commission
Indemnification Clause
Clause in which one party agrees to compensate another for a loss or damage
Agency
Client Relationship
COE
Close of Escrow
NOT a freehold estate:
Fee determinable
Brokerage
Relationship
Responsibilities of an agent
Coald- Care, skill, and diligence Obedience of lawful instructions from the client Account for all funds entrusted to the agent Loyalty to the client above the interest of the agent or anyone else. Disclosure of all info about the property, transaction, and other party IMMEDIATLY to the client.
Net Lease
Commecial Lease. Lessee pays taxes and insurance
Percentage Lease
Commecial Lease. Pays per SF payment plus percentage of sales
CPR
Commissioner's public report
Implied Agency
Communication of agreement. Example: "Take this deal this is the best for you"
CAM License
Community Association Management
Actual damages
Compensate for the cost of that which has been lost.
Actual Damages
Compensates for the cost of whats been lost
Liquidated Damages
Compensation agreed to be paid by the breaching party in the contract
Contingency
Completion of a certain act or promise
Contingency
Completion of act before contract is binding
CERCLA
Comprehensive Environmental Response Compensation and Liability Act
Counter Offer
Conditional acceptance
Estate at Will or Tenancy at Will
Consent of possession for uncertain period of time Death of either party terminates
Implied Contract
Contract created through action
Note
Contract or promise to pay, contains details, creates debt.
Document that contains buyer/seller agreement
Contract to sale, sale agreement, offer to purchase
Answer: C. Georgia real estate firms are free to use Trade names -- whether those of their own devising or of a national franchise. However, the name of a firm as it is registered with the Commission must appear in all advertising
Corey Palmer is the registered owner of "Cory Palmer Real Estate." However, he operates under the trade name of "Clubhouse Realty." Which of these statements is TRUE regarding advertising? A. he must use only his trade name in advertising B. he may use either his trade name or his registered name C. he may use his trade name but must also conspicuously display the firm's registered name D. he may use his trade name so long as his registered name appears somewhere in the advertising
Cooperative Ownership
Corporation holds title and tenants receive shares of stock and proprietary lease
Designated agency
Created when an agent is appointed by a broker to act for a specific principal or client. This is used when one agent listed the property and another agent within the company secured the buyer for the property. The listing agent would be the designated agent of the seller, and the buyer's agent would be the designated agent of the buyer.
Transaction Brokerage
Customer relationship
Value =
D.U.S.T. - Demand, utility, scarcity, time
Answer: C. In Georgia, salespeople, associate brokers, or other affiliated licensees may hold trust accounts if their BROKER APPROVES.
Dale Douglaston is a licensee who maintains a trust account. How often must he provide his broker with a written reconciliation comparing the account's balance with its liabilities? A. on a monthly basis B. semi-annually C. quarterly D. whenever the broker requests it
Comprehensive Loss Underwriting Exchange (CLUE)
Database of consumer claims that insurance companies can access when underwriting or rating insurance policy
listing termination
Dearie D-death e-expiration A- agreement r- revocation I incapacity E-emanate domain
Death and Contracts
Death does not terminate a contract
When a breach of contract occurs, seller can:
Declare the contract forfeit and keep the earnest money
B Testator's deed
Deeds executed by court appointed representatives include all of the following EXCEPT: A Guardian's deed. B Testator's deed. C Executor's deed. D Administrator's deed.
buildings and other improvements are considered to be a part of the land
Deeds, contracts and other documents dealing with real estate describe only the land because
If a party is granted a property upon the condition that a certain use will continue in the future, this would be called
Defeasible fee
Estate for Years or Tenancy for Years
Definite beginning and end dates (can be less than 1 year) No notice to terminate, in possession after termination is holdover
Periodic Tenancy
Definite beginning and ending with an automatic renewal. Noticed required 60/30 or more if in lease agreement. 60 days from from landlord to tennant. 30 days from tennant to landlord
Estate for Years
Definite beginning and ending. No automatic renewal. No notice required to terminate
For Option, need:
Definite sales price, definite time period
DUST
Demand Utility Scarcity Transferability
In a lease, the lessor:
Demise his interest
Steering
Directing people toward or away from areas based upon their class.
...
Discount points Definition: The percentage of a loan which determines the amount paid to the lender to increase the yield. One discount point is equal to one percent of the loan amount.
If you own land and have the right to impose restrictions on that land, your ownership is;
Fee simple
Answer: D. This term is usually used in reference to only government loans (FHA and VA). Discount points are any points paid in addition to the 1% loan origination fee.
Discount points refer to A. a system of figuring out how much the property will be discounted B. points paid in addition to the 1% loan origination fee C. usually only FHA and VA loans D. both B and C
Answer: A. The Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (public assistance) and other factors.
Discrimination is prohibited in lending practices under: A. ECOA B. RESPA C. Truth in Lending Act D. FNMA
Deed
Document used to transfer a title. Buyer doesn't sign
Net Listing
Does not contain specific sales price or commission- Illegal in most states
Facilitator or Transaction Broker
Does not represent either party in a transaction. Both customers.
Facilitator/Transaction Broker
Does not represent either party. Both parties are customers
Answer: B.
Does the commission have to be notified of Jim's move? A. no, it is a matter between Jim and his new former brokers B. yes, they must be notified in writing by Jim's former broker within thirty days C. yes, the commission must be notified in writing within sixty days D. yes, the commission must be notified in writing within ten working days
A right of way over parcel A to parcel B identifies parcel B as the
Dominant estate
Legal life estate
Dower- A widow's interests in her husband's real property. Curtesy- A husband's interests in his deceased wife's real property. Homestead- A portion of the value of the real estate that is protected from unsecured creditors.
adverse possession of property
Dr. cohen Dr- doctor C- contentious o- open H- hostile E- exclusive n- notorious
Which of the following would have an interest in real estate but not an estate?
Easement
An owner of lakefront property has 50 acres and divides it into lots. Owner keeps the lots closest to the lake. How is an easement to the lake preferred by lot buyers>
Easement appurtenant
Listing Agreement
Employing brokerage to find ready, will and able buyers Exclusive-right-to-sell Exclusive Agency Open Net Option
EPA
Environmental Protection Agency
EEOC
Equal Employment Opportunity Commission
2 Types of Redemption
Equitable and Statutory
The degree, quantity, quality, or interest one has in real estate is called:
Estate
A holdover tenant would have
Estate at sufferance
A tenant is living without permission on the property after the lease expires. What type of estate would the tenant most likely hold?
Estate at sufferance
A lease is for an indefinite period of time. This is called:
Estate at will
If at the end of a lease, the tenant is allowed to remain for an indefinite length of time, this is best described as:
Estate at will
A husband and wife own the property as tenants in common. If one dies the property would pass to
Estate of the deceased
Replacement Cost =
Estimate of Replacement Cost - Depreciation + current Land Value
absorption rate
Estimate of how quickly homes sold in the past year
Absorbtion Rate
Estimate on how quickly homes have sold in the neighborhood within a the year
Answer: D. A condominium owner holds title to his individual unit. A co-op owner, on the other hand, is technically a renter. It's his stock in the corporation holding title to the property that gives him the right to lease the unit as well as sell that right to another.
Evan lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan covering the entire property. Like the other residents, Evan owns stock in the corporation and has a lease on his apartment. This type of owner has A. condominium B. planned unit development C. time-share D. cooperative
Puffing
Exaggerating. Allowed
Taxpayer Relief Act 1997
Exclusion of capital gains on sales of principal residence. Single Filers- $250,000 Married- $500,000
Exclusive Agency Buyer Agency
Exclusive contract- Only gets paid if broker finds property
protects the lender
FHA mortgage insurance
Civil Rights Act of 1866
Fair Housing Law - Race Only
FICO
Fair Isaac and Company
FMV
Fair maket value
FNMA
Fannie Mae
answer: B. single family residences made up of 1-4 units
Fannie Mae buys a. only single-family detached residences b. single family residences made up of 1-4 units c. any type of residential property regardless on the number of units d. any type of property
Buyers on secondary market
Fannie Mae, Ginnie Mae, Freddie Mac
FmHA
Farmers Home Administration
Interstate
Federal
Sherman Anti-Trust Laws
Federal (interstate commerce) law. Governs fair business competition (prohibiting monopolies), boycotting, Collusion, Tie-Ins
FFH
Federal Fair Housing Acts
the deed is invalid and cannot transfer title
Greg Houser wished to give his nephew a residential lot as a wedding present. Greg properly executed a deed and left it with his attorney for safekeeping. Greg died before the wedding and the delivery of the deed. The result is:
A leases to B. A will pay all costs of operation plus repairs. This lease is called:
Gross
GRM
Gross Rent Multiplier
NOI =
Gross potential income minus vacancy rates, collections and opperating expenses
VA Loans ___ loan for lender
Guarantees
Hadicap includes:
HIV Aids
Value Depreciation
Home goes down in value due to age, wear & tear - 1/27th per year
Answer: D. Accretion means the addition to a parcel of land by sand or soil deposits due to the action of a river or other body of water over time. Avulsion refers to the loss of land as a result of its being washed away by sudden or unexpected action of nature, such as a flash flood that re-routes a river.
Homeowner Ginny acquired the ownership of land that was deposited by a river running through her property by: A. reliction B. succession C. avulsion D. accretion
Duties to both customer and clients include:
Honest, Fair, Ministerial acts, Disclosure of material , known adverse facts within one mile, Any conflicts of interest (material relationships).
120 days after completion of work
How long does a subcontractor have to file a mechanic's lien?
Answer: C.
How many acres are there in the parcel containing the N 1/2 of the SE 1/4 of the SW 1/4 of the SE 1/4 of the NE 1/4 of Section 15? A. 5 B. 2 ½ C. 1 ¼ D. 10
Answer: D. To apply for the Broker's license requires 3 years experience.
How many years of sales experience must a salesperson have before they may apply for a broker's license? A. there is no salesperson experience requirement for the Broker's license B. three months experience C. one years experience D. three years experience
Tenancy by Entirety
Husband and wife owners, one title and each own 100% of property Termination by consent death or divorce
Answer: C. Statute of limitations exist to keep the legal system from getting bogged down in old disputes and allow for evidence and recollections to remain reasonably fresh. Civil limitations typically range from 1 to 6 years, though in some cases up to 25 years.
If a buyer defaulted some time ago on a written contract to purchase a seller's real estate, the seller can still sue for damages, if he is not prohibited from doing so by the: A. statute of frauds B. law of agency C. statute of limitations D. broker-attorney accord
May be partitioned, may still be held by them as tenants in common
If a husband and wife in a community property state are divorced, their former community property:
Fair Housing Laws
If a licensee is in violation of federal law, they are also in violation of GA state RE laws.
A $22.96
If a loan is in the amount of $87,000 and the interest rate is 9.5 percent, the daily rate for computing interest proration is: A $22.96 B $22.64 C $21.45 D $21.75
A The seller becomes secondarily liable to the lender
If a purchaser assumes and agrees to pay an existing mortgage loan originally signed by the seller, then: A the seller becomes secondarily liable to the lender. B the purchaser takes no personal liability for paying the debt. C the seller is released of all liability. D the purchaser is released of all liability.
B The transfer tax
If a purchaser is buying a home for cash, which of the following closing costs would not be reduced? A The intangibles tax. B The transfer tax. C The closing attorney's fee. D The discount points
Answer: B.
If a salesperson acts as an independent contractor, then: A. He is responsible to his broker as to how his work is performed. B. He controls his own working hours. C. All of his listings belong to him. D. His broker must withhold income tax from his commission checks.
11%
If an interest payment of $115.50 is made every three months on a $4,200 loan, what is the annual interest rate?
Tenancy in common
If one joint tenant sells his or her property, the new owner would be a tenant in common with the other joint tenants.
Right of first refusal
If the property is offered for sale, I want to be the first in line to purchase. No definite sales price. Can purchase by matching offer.
D Buyer's Loan
If the seller is paying part of the buyers finance cost, the cost will be calculated as a percentage of? A sales price. B gross equity. C seller's loan. D buyer's loan.
A $659.72
If the seller's existing loan is for $95,000, at 10%, and the payment due date is on the first of the month, at a closing to take place on the 25th, the seller will owe interest of approximately: A $659.72 B $79.00 C $26.25 D $9,500.00
B. When the Seller provides all or part of the financing it is called owner financing.
If you are buying a house and asking the Seller to provide all or part of the financing, you are asking for _______ financing. A. special B. owner C. personal D. non-bank
Answer: (A) fixed-rate mortgage
If you have a loan in which the interest rate does not change during the term of the loan you have a ________ mortgage. A. fixed-rate B. conventional fixed-rate C. owner financing D. all of the above
Answer: A. exclusive listing
If you list your property with a real estate agent and sign a written agreement that they are the only ones entitled to a listing for a specific time you have given them an A. exclusive listing B. exclusive right to advertise C. exclusive right to show D. inclusive listing
Which of the following leases escalate?
Index
Blockbusting
Inducing owners to sell by telling them persons of a protected class are moving into the neighborhood. (Panic Selling)
Everything is on a 360 day calendar except ?
Insurance
Answer: B - A repayment plan is an arrangement made to repay delinquent installments or advances.
If you made an arrangement to repay delinquent installments or advances, you would be setting up a A. good faith payment plan B. repayment plan C. another loan pay off D. oral contract
M&T form a corporation to purchase a parcel of real estate. How would title be held?
In Severalty
Answer: C. In a Graduated Payment Mortgage, the payment changes. In a Adjustable Rate Mortgage (ARM), the interest rate changes.
In a Graduated Payment Mortgage, the _______ changes and in an Adjustable Rate Mortgage the ________ is subject to change. A. principal, interest rate B. interest rate, payment C. payment, interest rate D. interest rate, principal
Answer: (C) - the seller
In a Land Sales Contract, who retains legal title to the property? A. buyer B. mortgagee C. seller D. mortgagor
Answer: A. Selling broker is an agent to the listing broker and sub-agent to the seller
In a cooperative sale, where the listing broker and the selling broker represent the seller, the selling broker has which of the following relationships? A. agent of the listing broker B. sub-agent of the listing broker C. agent of the seller D. sub-agent of the buyer
Nondisturbance clause
In a mortgage states that the mortgagee agrees not to terminate the lease in the event of foreclosure. However, the tenant must be in compliance with the lease terms.
Answer: A.
In a refinance transaction, what happens? A. one loan is paid off with the proceeds from a new loan using the same property as security B. an additional loan is added to the present loan C. the loan's interest rate changes D. the term of the loan is increased
Answer: B. Since the vacancy rate is usually not a condition of employment, it is usually not in the employment agreement. It is also something that would change often.
In a typical property management agreement, which would NOT be included? A. the property manager's salary B. the allowable vacancy rate C. the property manager's functions D. a description of the property
...
In an adjustable rate mortgage, an increase in interest rates will a. cause an increase in the payments b. cause a decrease in the payments c. cause no change to the payments d. either A or B, depending on the prime rate Definition: a. cause an increase in the payments - See more at: http://www.coursehero.com/flashcards/92225/REal-Financing/#sthash.1LCMtpV6.dpuf
Equitable title
In an executory contract- such as a sales contract, land contract or deed of trust- the buyer's interest in the property is called an equitable title interest. Although the legal title is held by another party, the buyer does have the right of possession and an insurable interest in the property.
Answer: B. In this type of contract, the BUYER doesn't receive legal title to the property until the final payment is made. The BUYER receives equitable title at closing, and upon final payment to the seller receives legal title.
In an installment land contract, what type of title did the seller retain? A. joint B. legal C. equitable D. record
C Value of an item
In determining whether an item is a fixture, which of the following would not be considered? A Method of attachment. B Adaptation to the real estate. C Value of the item. D Legal interest of the annexing party.
C conservation
In developing a master plan for a community, all of the following might be "land use districts" EXCEPT: A industrial. B multi-family. C conservation. D recreation.
An easement given to a person would most likely be:
In gross
Answer: A. For example, let's assume a prospective buyer asks about the condition of the plumbing and Paula replies, "I asked the owner and he said he's never experienced a problem." If a major plumbing repair becomes necessary eight months AFTER the sale, Paula would NOT be liable because she met the two conditions.
In listing a property, Paula makes a false statement to potential buyers. In which of these circumstances is she NOT liable for the misstatement? A. if she, a) didn't know the information was false and, b) disclosed the source of the information B. If she knew the info was false, but dropped hints that the buyers should investigate more thoroughly on their own C. if she gave the false information to protect the confidentiality of her client D. if she gave the false info in order to get the best price for her client
A
In the purchase of a single family residential house, the buyers thought they has been discriminated against. Under the Federal Fair Housing law the buyers could file a complaint with HUD within: A. 1 year B. 2 years. C. 3 years. D. 4 years.
Answer: B. Many homeowners are surprised the first time they receive a letter from a lender they've never heard of informing them that they now hold the mortgage on their home and that future payments should be sent to them. This secondary market is where lenders buy and sell mortgages to balance their portfolios according to market conditions and their internal needs and objectives. It should be noted that the terms of the mortgages bought and sold cannot be changed by the new note holders.
In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? A. primary market B. secondary marker C. mortgage market D. consumer marker
Freehold estates
Include fee estates and life estates. A freehold exists for an uncertain duration. Nonfreehold estates include leasehold estates which are based on calendar time.
General Lien Types
Income tax lien, judgement lien.
Depreciation/Cost Recovery
Income tax reduction that allows taxpayer to recover the cost of other basis of property over the assets useful life
IRV
Income/Rate= Value formula for capitilization rate
Escalator Clause
Increase or decrease the interest rate for breach
An Estate at will would be for
Indefinite duration
Estate from Period to Period or Periodic Tenancy
Indefinite period/auto renew until notice given
What type of lease wold help maintain the financial position of the lessor and lessee
Index
Answer: A. Insurance Companies usually make loans through mortgage companies. These "loan correspondents" negotiate and service their loans.
Insurance companies not willing to deal directly with borrowers, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: A. mortgage companies B. savings & loans C. FHA D. banks
Home Protection (warranty) Plans
Insurance plan that covers repair or replacement of appliances, electrical and plumbing
FHA Loans ___ loan for lender
Insures
Construction Loan
Interest Only Loan
Time-share
Interval ownership for allocated period of time
Encroachment
Intruding on real property
A. Ownership of an estate is transferred by operation of law, by natural causes, or by court action
Involuntary alienation means: A ownership of an estate is transferred by operation of law, by natural causes, or by court action. B ownership of an estate cannot be transferred without consent of the owner. C ownership of an estate is transferred by a deed. D ownership of an estate belongs to someone from another country.
Void
It is missing an essential element and has no legal force and effect (i.e., the contract was not signed by the person with the authority to perform)
Voidable
It may be rescinded by one or both parties. Contracts are voidable by the innocent party if entered into under duress, under undue influence, through misrepresentation, through fraud, with a minor, or with an incompetent person. A contract with a contingency that cannot be met may be voidable.
Functional Obsolescense
Items inside property lines that are no longer useful, ie: outhouse
External (economic) Obsolescence
Items outside property lines. Road or zoning changes, smoke stacks, paper factory
TAXES ASSESSMENT DATE
JAN 1 FOR CALENDAR YEAR AND ARE PRO RATED AT CLOSING
Joint tenancy
Jack, Jerry and Jill buy property together with stated equal interests and the right of survivorship. Their form of ownership is known as:
Answer: C. A salesperson is free to leave his or her broker at any time.
Jim Woolcott is a licensee who wishes to leave his current broker and work for another. What difficulties is he likely to encounter? A. since his broker holds his wall license, he must agree to Jim's wish to leave B. jim must get the permission of both his current broker and the real estate commissioner C. jim will have no difficulties D. jim will have no difficulties, but must provide the real estate commission with thirty days advance notice of his intent to move
each payment was of a constant amount with decreasing portions applied to interest with each installment
John borrowed $50,0000 to be amortized over thirty years in order to purchase a home. His monthly payments were to be made under a constant mortgage plan. this means:
J&R own property and R dies. R's children try but can't obtain title from J. What type of title did J&R hold?
Joint tenancy
What tenancy would allow survivorship?
Joint tenancy
In a tenancy in common, there are as many titles as tenants; in a joint tenancy there is only one title
Joint tenancy and tenancy in common are distinguished from each other by which of the following statements?
B terminate
Jones, a life tenant, grants Smith an easement across Jones's land. Later Jones dies. The easement will: A go to Jones heirs. B terminate. C remain Smith's. D not be enforceable because a life tenant cannot grant an easement without committing waste.
D a debit on both forms
Joshua is buying a house. Among other concessions, the seller has agreed to pay half of the cost of the PMI that will be charged at closing on the buyer's 95% new mortgage loan. On the Net to Seller and Cost to Buyer forms, this will show as: A a credit to the buyer and a debit to the seller. B a credit to the seller and a debit to the buyer. C a credit on both forms. D a debit on both forms.
D Progression and regression
Karlie Sinclair has paid $300,000 for a new house in a neighborhood of properties that are worth a similar price. Now she is considering some major improvements to both the house and lot, which would cost $200,000. Which principle of valuation might suggest that this is not a wise move? A Highest and best use. B Decreasing returns. C Substitution. D Progression and regression.
ITANGIBLE TAX EQUATION
LM-AM X 1.5/500
Real Estate =
Land + Appurtenances
Actual Eviction
Landlord sues for possession
Fannie Mae
Largest purchaser of notes on the secondary market
Sale of Property / Death
Lease stays good except an estate at will (verbal lease)
What type of an estate would a tenant have?
Leasehold
When a lease is inherited, the estate would be known as:
Leasehold
Bequest
Legacy - Transfer of "Personal Property" with a will
Suit for Specific Performance
Legal action to force performance of contract
Mortgagee
Lender
Redlining
Lenders refusing to loan in certain areas based upon protected classes.
When a lease is entered into, it is between the?
Lesse and lessor
When a party has an interest in a property, what is not considered Fee Simple Absolute Interest?
Lessee with a long term lease
Leasehold interest
Lessee's interest
In a sale lease back transaction:
Lessor retains legal title
C
May a licensee still collect earned commissions directly from a previous broker if the licensee transfers to a new firm? A. N, the licensee forfeits all commissions when they transfer. B. No, the licensee can only be paid commissions by the new firm. C. Yes, provided both brokers agree in writhing to the expressed terms under the licensee shall be compensated by the former broker. D. Yes, the licensee earned the commission under the previous broker and can be paid directly by that broker.
Voidable
May be rescinded by 1 or both parties eg. contingency not met, no reality of consent, w/minor or incompetent
Voidable
May be rescinded by either party. Voidable if: Under duress, under influence, misrepresentation, fraud, a minor, incompetent, contingency cant be met
Caveat emptor
Means let the buyer beware
Caveat venditor
Means let the seller beware
Valid Contract
Meets all essential elements and enforceable. Competent and authorized In writing unless a lease/listing under 1 year. Proper form/legal purpose; Illegal is void Legal consideration (promise/value) Offer/Acceptance or Mutual assent Signatures by both parties
Void
Missing element/no legal force eg. no signatures
Void
Missing essential elements and has no legal effect
MIP
Mortgage insurance premium
D. Smith is Jones heir
Ms. Smith, who is in good health, makes a will leaving her real property to Mr. Jones. Under such circumstances, all of the following are true statements EXCEPT: A Jones has no interest in Smith's property despite being a devisee. B Smith's will must be probated after her death in order to pass title to Jones. C Smith can convey to a third party all the interest she has in the property despite the will. D Smith is Jones heir.
MLS
Multiple Listing Service
Tenancy in common
Multiple owners but interest stakes unequal. Unity of possession. Inheritable because of separate deeds.
How to determine the number of acres in a square or in a rectangular shape property?
Multiply length x width then divide by 43,560 (number of square feet in one acre of land
Trust account reconciliation:
Must be done monthly by client
Client Duties
Must be expressed in the agency agreement and typically include: Care, Obedience, Accounting, Loyalty, Fiduciary, Disclosure, Confidentiality
After consumation, advertising:
Must be removed within 10 days
Joint tenancy
Must be unities in time, interest, and possession for the joint tenancy to be created. Each joint tenant has the right to sell, mortgage, or lease an interest without the consent of the other owners.
To complain about fair housing
Must file complaint with HUD within 1 year
Answer: A. A grantee taking title to a real property "subject to" a mortgage is not personally liable to the mortgagee for payment of the mortgage note. In the event that the grantor/mortgagor defaults in paying the note, however, the grantee could lose the property, and thus his or her equity, in a foreclosure sale.
Nelson (grantor/mortgagor) sells his home to Randall (grantee)"subject to" an existing first mortgage loan he obtained five years ago. After nine months, Randall can no longer continue to make the monthly payments. Under these circumstances: A. The purchaser (grantee) has no liability to the lender. B. The purchaser is solely liable to the lender. C. The purchaser is primarily liable to the lender and the seller is secondarily liable. D. The seller is primarily liable and the purchaser is secondarily liable.
A the purchaser has no liability to the lender
Nelson sells his home to Randal subject to an existing first mortgage loan he obtained five years ago. After nine months, Randall can no longer continue to make the monthly payments. Under these circumstances: A the purchaser has no liability to the lender. B the purchaser is solely liable to the lender. C the purchase is primarily liable to the lender, and the seller is secondarily liable. D the seller is primarily liable to the lender, and the purchaser is secondarily liable.
Tenancy at Will
No contract - Notice must be 60/30 days
Jones vs. Mayer (1968)
No entity can ever exempt based on race
Tennancy at sufference
No permission to stay. Actual eviction
GREC Commissioner
Not one of 6 members. Hired by the commission to run the day to day operations. Chief executive of the commission. Full time employee. Cannot hold an "active" license
Two parts of loan
Note & Security Document
Negotiable Note
Notes can be bought and sold
Terminating an offer
Notice of revocation by the offeree, death of either party, insanity or either party, and a counteroffer all terminate an offer.
Intagibles Tax
ONLY ON NEW LOAN. For later forclosure in necessary. Negotiable who pays
notary signature
ONLY REQUIRED FOR RECORDING DEEDS, DOESN'T MAKE SOMETHING VALID OR LEGAL
Breach of contract
Occurs when one party fails to perform as promised, deviates, from the specified terms of the contract, or when a person interferes with another party's performance making it impossible for the duties to be fulfilled.
Elements of a contract
Offer and acceptance Consideration Legally competent parties Consent Legal purpose
OEO
Office of Equal Opportunity
"this is my company's policy"
Ok statement
A
On January 10, a contractor started work on a new house. The work was completed on October 10. The general contractor was paid but a subcontractor for the general contractor was not paid. On December 1 the subcontractor filed a mechanics lien. What is the effective date of the mechanics lien? A. January 10. B. October 10. C. December 1. D. A subcontractor cannot file a mechanics lien.
Answer: C. the borrower held the loan for forty-two months. 8% × $6,071 = $486 per year $486 ÷ 12 (months) = $40.50 per month $1,700 ÷ $40.50 = 42 months
On an 8% straight term loan of $6,071, the borrower paid total interest of $1,700. How long did he have the loan? A. 30 months B. 36 months C. 42 months D. 48 months
B Reserve for replacements
On an operating statement, the allowance for items that have a useful life of more than one year is called: A accrued depreciation. B reserve for replacements. C a variable operating expense. D debt service.
Fee Simple Condition Subsequent
On the condition activities not performed Right of reentry possible
Answer: A. Once you close your transaction, you probably have an escrow account with your lender which is composed of extra money takes from your monthly payments to be put in escrow and pay your taxes and insurance when they come due. The lender pays them with your money instead of you paying them yourself.
Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxed and homeowners insurance when it comes due. This account is called A. an escrow account B. a savings account C. a regular checking account D. both B and C
Uni-lateral Contract
One Promise
Dual Agency
One agent, two principals, one transaction
General Agent`
One authorized to transact all of the principal's affairs within the context of a broad commercial or other kind of endeavor. Property manager.
Dual Agency
One broker (thro one affilliate) represents both buyer and seller
Exclusive Agency Listing
One broker lists the property and seller retains the right to sell
Exclusive Right to Sell Listing
One broker lists the property, other brokers have the right to sell the property
Single Agency
One broker representing the buyer or seller in transaction.
Single Agency
One broker represents One client. Usually includes a "coop" (in writing). Agency agreements an agreement.
Designated Agency
One broker represents both buyer and seller but designates two separate affiliates — one to represent buyer the other to represent Seller. Not "Dual Agency" by law. Confidentiality a must between affiliates.
D %1
One discount point is what percentage of the loan amount? A 1/8% B 1/4% C 1/2% D 1%
Designated Agency
One firm, two agents, two clients
Answer: B. The difference between an employer and a independent contractor is that an employer must pay an unemployment tax for each employee
One of the significant differences between an employee and an independent contractor is that: A. an independent contractor does not need an affiliation agreement with the broker B. an employer must pay an unemployment tax for each employee C. only the independent contractor can have draws against future commissions D. only the independent contractor has social security withheld from his or her commission checks ON STATE EXAM!
Executory contract
One or both parties have duties to perform. Example: The buyer must financially qualify and the seller must produce a marketable title.
Executory Contract
One or both parties have duties to preform.
Breach of Contract
One party fails to preform as promised
Forfeiture Clause
One party must forfeit something to another property
Unilateral Contract
One party obligated to perform eg. option contract; seller only performs
Unilateral
One party obligated to preform
Broker
One per firm. 60 hour course. Licensed for 3 years
Single Agency
One principal, one transaction
Facilitator or transaction broker
One who does not represent either party in a transaction. Both parties are treated as customers in the transaction.
Who can Affiliates get comission from?
Only Brokers
Who can Draft RE Contracts?
Only attorneys
Who can sue for commissions?
Only licensed, employed (contract) brokers. If open or "just" exclusive listing, must prove procuring cause (effort that brings about the desired result).
Unilateral contract
Only one party is obligated to perform in a unilateral contract.
When is comission earned on an option deal
Only when exercised to buy
Open Listing
Open to all brokers: Broker who procures the cause get's paid. Uni-lateral.
In order to acquire an easement by prescription you need
Open, hostile, coninuous use
Option contract
Optionor (seller) keeps open an offer to sell or lease real property in return for option money. While the optionee (buyer) does not have to buy, the optionor must sell, should the buyer exercise the option.
Conventional life estate (Life estate)
Ordinary with remainder or reversion- Set up by a grantor. Life tenant has full use and enjoyment of property for tenants life. Property reverts to grantor on the death of the life tenant. (reversion) Property is transferred to the remainderman or a party other than the grantor.
Answer: D.
Price fixing between brokers is a violation of federal antitrust laws. If your broker fixes prices with another broker, he or she may: A. be found guilty of a criminal offense B. be found civilly liable to injured persons C. face disciplinary proceedings by the Real Estate Commission D. all of the above
Loan Amount =
Price x LTVR
PITI
Principal Interest Taxes and Insurance
Special Agent
Principal delegates a specific act or transaction
General Agent
Principal delegates broad powers and relationship is ongoing
When must agencies offered be defined?
Prior to any agency contract
covenants
Private agreements that govern the use of land are known as:
PMI
Private mortgage insurance
Do Not Call Registry
Prohibits telemarketing calls to numbers on the registry. • Exemptions include: (1) Previous clients up to 18 months after expiration of client relationship. (2) Consumer who made an inquiry for 3 months. (3)Consumers who give written permission.
Need for Property Management Agreement:
Property Description (legal), manager duties (responsibilities), reporting types and instructions, compensation (% of gross, flat, combo), Budget/expenses, maintenance. Can't have clause forcing % occupied.
Community Property
Property obtained by marriage are considered mutual effort Surviving spouse gets one half other is inhertited
Ann will fail because of the doctrine of laches
Property owner Ann was upset over neighboring property owner Bee's decision to build a 12-story apartment house. Since zoning permitted, there was little Ann could do at the time. Shortly after construction began, property owner Ann found that the foundation of the building was two feet over the property line. In order to punish Bee, Ann waited untill 11 stories had been completed before asserting a claim and demanded the building be torn down. The probable result will be:
Specefic Lein Types
Property tax lien, mortgage lien, mechanic's lien
A remeinderman would most likely be concerned with
Property waste
A gives to B for the life of C. This type of estate is called:
Pur autre vie
...
Purchase and Sales Agreement is AKA (4): Definition: - Earnest Money Agreement - Deposit Receipt - Sales Contract - Contract of Sale
...
Quantity survey method: Definition: involved detailed estimate of the quantities and prices of construction materials and labor, added to the indirect costs such as building permits, surveys, for what is generally the MOST ACCURATE replacement cost estimate but also more complex and time consuming
Answer: B. RESPA concerns itself ONLY with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited.
RESPA would prohibit which of the following acts? A. steering B. paying of kickbacks C. blockbusting D. redlining
REMT
Real Estate Mortgage Trust
RESPA
Real Estate Settlement Procedures Act
the right to receive payments may be transferred from holder to holder
Real Estate loans are customarily evidenced by two instruments: a promissory note and a security instrument (mortgage, deed of trust, security deed). while the security instruments are not negotiable, the note is, because:
Capital assets
Real estate and stocks are examples of capital assets. When a capital asset is sold or exchanged for a profit, the profit is called a capital gain.
When a breach of contract occurs, both parties can:
Recind (forgive), sue for actual damages (equity), sue for specific performance
Estate in land
Refers to a party's legal interests or rights to a property. To be an estate, an interest must be possessory or may become possessory in the future. AN EASEMENT IS NOT AN ESTATE IN LAND BECAUSE IT DOES NOT ALLOW FOR THE POSSESSION OF THE PROPERTY.
Answer: C. Fair Housing Laws do apply to transaction involved in the selling or renting of property. (A) Fair Housing Laws prohibit discrimination on the basis of race, color, religion, national origin, sex, handicap, or familial status. (B) All properties are not exempt as one can NEVER discriminate racially under any circumstances. (D) Fair Housing Laws (1968) only apply to residential property, not commercial property.
Regarding Fair Housing Laws, which is true? A. it prohibits discrimination based on race, national origin, and religion only B. all property that do not discriminate in advertising and do not use an agent are exempt C. it applies only to discrimination involved in the acts of selling or renting property D. it applies only to commercial property transactions
Answer: A. If a broker participating in a real estate transaction doesn't receive any deposits, earnest money or any other third party funds intended as part of the transaction, the broker is not required to maintain a trust account. However, should that broker accept those funds, the broker must open a designated trust account within one business day
Regarding trust accounts, which of these statements is TRUE? A. only brokers who accept trust funds must maintain a designated trust account B. all brokers, active and inactive, are required to maintain trust accounts C. only active brokers are required to maintain trust accounts D. a firm or broker may maintain only one trust account at a time
Truth in Lending (Reg Z)
Regulates advertising for lenders by making required disclosures of loan costs, APR.
Answer: B. Regulation Z (Truth-In-Lending Law) does not apply to business or commercial loans. It does apply to residential homes and contains requirements that ALL credit terms be disclosed when the ad contains trigger terms such as the down payment (C) or payment terms (D).
Regulation Z would apply to all of the following EXCEPT: A. residential home loans B. business loans C. an advertisement where the down payment was noted D. an advertisement where the payment terms were noted
Answer: A. -A purpose of the Sherman Antitrust Act is to prohibit conspiracy in the restraint of trade. A form of this is called Price Fixing. Example: An agreement between two companies that compete with each other and make an agreement to charge the same rate. (ILLEGAL) -Sherman Antitrust Act also protects consumers from unfair business practices. -Sherman Antitrust Act also deals with monopolies. A monopoly occurs when one company has solid control over the market with a particular product or service, meaning a company is doing something that is "unreasonably anticompetitive" and that there is no competition. Example: when a company lowers their prices to a level that competition is forced out of business and then they raise their prices above the market level.
The Sherman Antitrust Act has as one of its purposes to: A. prohibit conspiracy in the restraint of trade B. guarantee businesses some protection from federal income taxation C. prohibit kickbacks in regard to providing settlement services D. guarantee non-business consumers some protection against hidden credit costs
a. within 3 days of the application
The Truth-In-Lending Act disclosure must be given to the borrower a. within 3 days of the application b. 3 days before closing c. 1 day before closing d. at closing
Answer: A. The mortgage insurance premium is paid by a mortgagor for mortgage insurance, either to a government agency, such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
The amount paid by a mortgagor for mortgage insurance, either government or private is called A. mortgage insurance premium B. private mortgage insurance premium C. FHA insurance premium D. VA insurance premium
contribution
The amount you put into upgrade equals amount of increasing/decreasing returns
D sales price
The brokerage fee is usually a percentage of the? A buyers loan amount. B gross equity. C seller loan amount. D sales price.
Answer: D.
The buyer and seller agreed to a purchase price of $103,500. The buyer received an 80% loan. How much was the buyer's loan and how did it appear on the settlement statement? A. $103,500. Credit the buyer and debit the seller B. $100,000. Debit both the seller and the buyer C. $95,000. Credit both the seller and the buyer D. $82,800. Credit the buyer only
Amendment
The changes made to a contract
an acceleration clause
The clause in a mortgage which allows the lender to call the outstanding loan amount due and payable should the borrower fail to make payments on time is called:
defeasance
The clause in a mortgage which cancels the lender's rights and claims against pledged property when the debt is repaid is called:
Answer: (D) - subordination clause
The clause that allows a lender to waive his lien priority in favor of another's is known as the: A. defeasance clause B. alienation clause C. subrogation clause D. subordination clause
Answer: (B) - buyer's brokerage engagement
The contract signed between a buyer and a broker is called? A. listing contract B. buyer's brokerage engagement C. listing engagement D. buyer's relationship
B The problem associated with estimating deprecitaion
The cost approach would be the least reliable method to use in estimating the value of a seventy year old building because of: A changes in building codes. B the problem associated with estimating depreciation. C changes in the cost of labor and materials. D the impact of new safety standards.
Answer: B - Maturity
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called A. its due date B. maturity C. end of the paper trail D. delivery
Answer: C. Like points, discount points are one-time charges equal to one percent of the loan amount for each point charged.
The discount points charged by a lender on a federal VA or FHA loan are a percentage of the: A. sales price B. appraised price C. loan amount D. down payment
C dedication
The donation of real estate for public use is known as: A reverse condemnation. B eminent domain. C dedication. D escheat.
A Scarcity
The fact that an acre of land in a rural area cannot fulfill as many needs as an acre of urban land describes the economic characteristic of: A Scarcity B Situs C Improvements D Location
Answer: A. Civil rights laws apply to owners of residential property, rental units, hotels and virtually any other building offering housing or accommodations to the general public.
The federal anti-discriminatory laws apply to which of the following? A. a broker selling a single-family home B. a private club not open to the general public C. office building sales D. the rental of industrial property
Answer: D. These are considered legal, not financing fees and therefore are not part of the Truth in Lending statement.
The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT: A. loan fees charged by the lender B. insurance premiums for mortgage insurance payment C. discount points and service fees D. recording fees and title insurance premiums
bequest, legacy
The gift of property by a nuncupative will would not be known as a :
Answer: (C) - accretion
The gradual build up of soil on a property through the action of wind or water is known as: A. erosion B. avulsion C. accretion D. reliction
Answer: C. Covenant of quiet enjoyment basically means that the grantee has the right to enjoy his property without being challenged. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it ; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant against encumbrances, which offers protection against encumbrances.
The grantor guarantees that the grantee's title is good against anyone who challenges the grantee's ownership is called: A) covenant of seisin B) covenant of further assurance C) covenant of quiet enjoyment D) covenant against encumbrances
C FHA
The purchaser will pay a Mortgage Insurance Premium on what type of loan? A 80% Conventional. B 90% Conventional. C FHA. D VA.
Answer: C. Net income is $73,500 minus $52,300 or $21,200. The value of the building is calculated by dividing net income ($21,200) by the rate of return (11%) which, in this case, is $192,727.27.
The gross income from an office building is $73,500 and the annual expense total is $52,300. If the owner expects to receive an 11% return on his investment, what is the value of the building? A) $475,454.54 B) $668,181.81 C) $192,727.27 D) $125,800.00
Answer: B.
The gross income multiplier for warehouse properties in a particular part of town is 9. If a warehouse in this area generates $250,000 in gross rents per year, what would be its indicated value using the income approach? A. $27.78 million B. $2.25 million C. $25.00 million D. $9.00 million E. $27.00 million
C an apartment building
The gross rent multiplier produces the best results when used to estimate the value of: A an office building. B a warehouse. C an apartment building. D a shopping center.
the Federal truth in lending act
The law which requires a 7 day waiting period after delivery of the disclosures and an additional 3 day waiting period if the APR changes more than 0.125%
Answer: B. Mortgages are used in a Lien Theory State. The lender is the mortgagee and holds the Title.
The lender in a state which uses mortgages is known as the: A. mortgagor B. mortgagee C. debtor D. grantor
Answer: (B) Conventional. Government-sponsored loan programs such as FHA are not actually loans, but guarantees to lenders to encourage them to make favorable mortgages available to qualifying individuals.
The lender is not insured or guaranteed against a loss, if the borrower defaults in repayment, under which type of loan? A. FHA B. Conventional C. VA D. GI
Answer: A. The "good faith" part of this requirement is the key element to consumers (buyers). By standardizing the forms and disclosures used by lenders, borrowers are no longer surprised by substantial and hidden costs at the time of closing.
The lender is required, under RESPA, to provide a detailed "GOOD FAITH ESTIMATE" statement at the time of loan application or within three business days to: A. the buyer B. the seller C. the buyer and the seller D. neither the buyer nor the seller
Lease option
The lessee (tenant) has the right to purchase the property under specified conditions or to renew or extend the lease at its end.
Answer: A. Easements grant ONLY access, NOT ownership, use or occupancy rights. Furthermore, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks. As such, they "attach" to a deed or lease and remain in effect, until specifically lifted.
The local utility company dug up Frank's garden to install a natural gas line. The company claimed it had a valid easement and proved it through the county records. Frank claimed the easement was not valid because he did not know about it. The easement: A. was valid even though the owner did not know about it. B. was an appurtenant easement owned by the utility company C. was not valid because it had not been used during the entire time that Frank owned the property D. was not valid because Frank was not informed of its existence when he purchased the property
Answer: A. Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used.
The maximum permissible "loan to value ratios" are: A. based on sale price or appraised value, whichever is lower B. not determined by federal statute in the case of FHA loans C. based on the banker's competitive market analysis D. fixed by law for conventional loans
D metes and bounds
The method of land description which identifies a parcel by specifying its boundary lines along with the terminal points and the bearing of each side is known as: A lot, block, and tract. B recorded plat. C government survey. D metes and bounds.
Answer: A. The recorded subdivision map may show the date that the land was divided into parcels, and not when the improvements were built. The tax assessor's records will show when the assessor first started assessing that improvement.
The most accurate determination of the age of a house can be made by inspecting the: A. Tax assessor's records B. Recorded subdivision map C. Physical condition of the house D. Architectural style of the house
Implied contract
The parties by their actions or conduct enter into a contract. Examples: buying gas at self service, ordering food in a restaurant, securing services for a taxi.
Express contract
The parties have specifically agreed, either orally or in writing, to enter into a contract.
C.
The person conveying an interest in real property is called A. the buyer B. the grantee C. the grantor D. the mortgagor
marker or mortgagor
The person who signs a mortgage note is known as the:
Answer: B.
The primary PURPOSE of a deed is to: A. prove ownership B. transfer title rights C. give constructive notice D. prevent adverse possession
Answer: D. Truth in Lending; (Reg Z) is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of the contract disguised as an "incidental" acquisition fee.
The primary purpose of Truth in Lending is to: A. control interest rates on behalf of the consumer B. control the true costs to close a transaction. C. disclose the true costs of only an FHA loan D. disclose the true costs of obtaining credit
A
The primary purpose of a competitive market analysis (CMA) is to: A. Provide an estimate of the selling price for the property. B. Locate the boundary lines. C. Determine the loan amount. D. Estimate the property taxes.
Answer: D.
The primary purpose of recording a Deed is to: A. protect the interest of the seller B. provide validity to the deed and finalize the transaction C. give actual notice D. give constructive notice
assurance of payment of items which could affect the lender's security
The principal advantage to the morgagee of budget mortgage is:
C 1 Dec
The purchaser who closes her new loan on Oct. 2nd will have her first payment due on ______? A 1 Nov. B 10 Nov. C 1 Dec. D 10 Dec.
A
The purpose of a market analysis is to determine: A. What purchasers have been willing to pay for homes similar to the home you are listing. B. maximum loan value of the property for lending purposes. C. If the property has hidden defects which must be disclosed to potential buyer. D. If the property is in compliance with zoning regulations.
b. protects the interest of the grantee.
The recordation of a warranty deed: a. gaurantees ownership. b. protects the interests of the grantee. c. prevents claims of parties in possession. d. provides defense against adverse possession. STATE EXAM!
Answer: B. Recording a deed does not convey, insure, or warrant ownership. However, it DOES protect the owner's interest in a property by serving notice that the recorded owner is the only recognized holder of title. This places a larger burden of proof and process on someone trying to assert a prior ownership interest and/or claiming a deedholder's title is clouded.
The recording of a deed: A. is all that is required to transfer the title to real estate B. gives constructive notice of the ownership of real property C. insures the interest in a parcel of real estate D. warrants the title to real property
a riparian right
The right of a land owner to have a reasonable use of water from an adjoining stream is known as:
B tenancy by the entireties and joint tenancy
The right of survivorship is associated with: A tenancy in common and condominium ownership. B tenancy by the entireties and joint tenancy. C tenancy in common and joint tenancy. D tenancy by the entireties and community property.
Police power
The right of the government to regulate for the purpose of promoting the health, safety, and welfare of the public
Eminent domain
The right of the government to take property for plug public use and pay just compensation. The government exercises this right by the process of condemnation.
equitable right of redemption
The right to reclaim property between he time of default and foreclosure sale is known as the:
Profit a prendre
The right to take crops, soil, or profit from the land of another.
The best explanation of an easement would be:
The right to use another property
Answer: A. The seller would owe money, and the buyer would receive money, because the seller has not paid the taxes. $2,500 ÷ 365 = $6.849315 × (the actual days)165 = $1,130.14
The seller and the buyer finally agreed to a purchase price of $203,500 with the closing to occur on June 15, 2011. The taxes for the year 2011 in the amount of $2,500 have not been paid by the seller. How much would the tax proration amount to, and how would it appear on a full settlement statement? Base your answer on a 365 day year, and the buyer is responsible for the day of settlement. A. $1,130.14 debit the seller and credit the buyer B. $1,130.14 debit the buyer and credit the seller C. $2,500 credit the seller and debit the buyer D. nothing. the seller does not owe since the buyer is buying
Answer: C. Land contracts are also known as installment contracts or contract of deed. In this type of arrangement, the buyer occupies the property, but the title is held in the name of the seller until some future point in time -- often when the last payment is made.
The seller under a Land Contract (AKA: Installment contract; Contract of deed) is called: A. the grantor B. the grantee C. the vendor D. the vendee
Sandwich lease
The sublessor's interest in a rental.
Answer: B. The assessment roll would produce a total assessed value, which could then be divided by the anticipated cost of government to determine the tax rate. The total value becomes the tax base for the community.
The tax assessment roll, showing the assessed value of property in an area, would be used to: A. Establish the tax rate B. Establish the tax base for the community C. Equalize the taxes paid by the owners in that area D. Determine the proportionate share paid by each property owner
C 03.4700 per $100 of assessed value
The tax rate of 34.7 mills is equivalent to: A $34.7000 per $100 of assessed value B $00.3470 per $100 of assessed value C $03.4700 per $100 of assessed value D $00.0347 per $100 of assessed value
$7,500
The total interest charged on a $12,000 straight loan for five years at 12 1/2% interest per annum is:
Assignment
The transfer in writing of interest in a bond, mortgage, lease or other instrument( any mortgage, contract or note can be assigned
Answer: B. An estate at will is an interest in a leased property that continues indefinitely, and may be terminated by either party.
The type of lease that is for an indefinite amount of time and may be cancelled by the landlord or tenant at any time is known as: A) a life estate. B) an estate at will. C) an estate from period to period. D) a fee simple estate.
Land contract
The vendor (seller) finances the property and retains the title to it until the final payment is made or some other condition is met by the vendee (buyer). The buyer possesses the property and retains equitable title. A land contract is also known as a contract for deed or an installment contract.
that real property is being granted; the quantity of the estate which is being granted
The words conveyance in a deed state:
If there is no new loan,
There is no intagibles tax
Answer: C. Licensing and other requirements provide a "base level" of protection against losses due to mishandling. Nonetheless, to protect associations, the law requires fidelity insurance once the $60,000 threshold is crossed.
Thomas Balkan is a community association manager who does NOT carry fidelity insurance. Under what circumstances is this allowable? A) If he never handles more than $25,000 at any one time. B) If he never handles more than $45,000 at any one time. C) If he never handles more than $60,000 at any one time. D) If he never handles more than $75,000 at any one time.
the construction company having an easement in gross
Timber and Stove Construction Company had an easement to stack lumber on another's land. This results in:
B Possesion
What is the one unity in a tenancy in common ownership? A Interest. B Possession. C Time. D Title.
Time of performance of the following activities is typically found in the offer:
Time for acceptance of the offer. Date for property, termite, lead-based paint, and other inspections. Date for loan application to be completed. Date for loan approval. Closing date. Date of possession.
Terminate Listing: Operation of Law
Time, Sale( or performance), Condemnation (zoning), forclosure, bankruptcy, death or insanity of seller/broker, extinction (burns down)
Interval ownership (time-share)
Time-share. The buyer receives a deed for the property that allows possession for an allotted time each year. The buyer has the right to occupy the property, and use of the facilities is limited to a certain number of years.
Time is of the Essence
Timely completion of the deal. Do Not Procrastinate
42
Tippins borrowed $12,000 on a straight note secured by a mortgage against the home. Tippins made monthly payments of interest computed on a 9 percent annual rate for the full term of the note. The total interest payments were $3,780.00. the term of the note was for how many months?
In a sale-leaseback, what is correct?
Title does move
Condition subsequent with right of reentry (fee simple estate)
Title is transferred on the condition that there is an activity that the grantee must not perform. The grantors must take legal steps to get the property back. The right of reentry is the possible future interest of the grantor.
A fee simple determinable estate is created on a property for a specific school. When the school closes, what is true?
Title reverts back to the original grantor
Commingling
To combine escrow funds in the same account with personal or business funds.
that constructive notice was provided
To defend a claim of ownership the owner must prove:
Buydown
To get a lower rate a home buyer can buy down the rate by paying the extra up-front cost charged by the lender.
Assignment
Total transfer of leasing rights. Both parties are liable to landlord. Thing like sublease except both parties liable.
plottage increment
Total value of the combined properties exceeds the total value of the individual properties. Achieved from performing an assemblage
Devise
Transfer of "Real Property" with a will. Think deVise --> Will
Assignments
Transfer of rights
Assignment
Transfer of rights and/or duties from one contract to another contract or from one person to another person.
Assignment
Transfer of rights or duties from one contract to another or person to another
.10 per 100
Transfer taxes
TRUE
True or False: Reproduction cost is the most appropriate cost estimation method to use for historic and other unique properties.
Bi-Lateral Contract
Two Promises
B in lien theory states, the lender has only a monetary claim to the property
Two different legal positions have developed regarding the lender's rights in property, where a mortgage has been given as security for a debt. Some states practice the lien theory of mortgage law while others follow the title theory. The difference is that: A in lien theory states, the borrower conveys title to the lender. B in lien theory states, the lender has only a monetary claim to the property. C in title theory states, the borrower retains legal title. D in title theory states, the lender has only a monetary claim to the property.
Tenancy in Common
Two or more people have separate legal title with undivided ownership in their fractional piece of property. Passes to heirs unity is possession e.g. air space and common areas in condo
Real property ownership/ interest
Types of ownership (estates in land) Joint tenancy, Tenancy in common, condominiums
HUD
U.S. Department of Housing and Urban Development
In GA Issues
UPTPA Superceeds
Ambiguities
Unclear or indefinite terms of contracts
Answer: C. "In a timely manner" means as quickly as possible...usually within hours.
Under BRETTA rules, when must a broker present offers to his or her seller client? A. immediately B. within twenty-four hours C. in a timely manner D. within three business days
Answer: B The intent of RESPA--the federal Real Estate Procedures Act-is to make borrowers more aware of costs and charges. Accordingly, it should be given at the time of application and no later than three days after that
Under RESPA, a copy of REAL ESTATE SETTLEMENT COSTS AND YOU must be given: A. within one day before closing B. at the time of loan application, or within 3 days of application C. within 5 days of application D. at closing
Answer: (C) - low down payment
Under Truth-In-Lending, which of the following would NOT be a "trigger term" and WOULD be allowed in advertising credit? A. $5,000 down B. 2% lower than prime C. low down payment D. 15 year loans available
Answer: (B) - Monthly Payments Graduated payment mortgages are aimed particularly at young families who expect to see their earnings rise over the next 5 to 10 years. As such, payments for interest and principal are less than the actual costs in the early years and gradually rise to make up the difference.
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A. interest rate B. monthly payments C. finance charge D. annual rate
Forfeiture Clause
Under certain circumstances one party must forfeit or give something eg. earnest money given if contract breached
Answer: (C) - RESPA
What requires a lender to give a Good-Faith Estimate? a. the "Little FTC" consumer protection act. b. Regulation Z. c. RESPA. d. FHLBB consumer protection statutes.
Answer: (D) within one month
Under certain circumstances, a broker may also allow commissions due to be paid from funds belonging to others to remain in a trust account. What, if any, is the time limit for removing or transferring these funds to another account? A. there is no limit. B. with six months C. within three months D. within one month
Answer: C. The first thing to understand about fair housing is that discrimination involves some sort of personal characteristic...such as race, religion, age, family structure and handicap. The second is that it involves some sort of "action." This is, actively steering a buyer away from a specific property or neighborhood towards another on the basis of that characteristic.
Under the Fair Housing Law, which of these is a prohibited activity? A. telling a prospective buyer that the price of a home has just been reduced when, in fact, it has not B. advertising a property as being in a "sought-after" neighborhood C. telling a prospective buyer with a handicap that a particular property is not available for inspection when, in fact, it is D. advertising a property as being "perfect for empty-nesters."
USTs
Underground storage tanks
UCC
Uniform Commercial Code
...
Unit-in-place method: Definition: involves estimating the cost of replacing specific components of a building such as the roof, floors, foundation, etc. and add all the estimates together - See more at: http://www.coursehero.com/flashcards/379378/WA-RE-FUndamentals/#sthash.XOaUDOn8.dpuf
Highest and best use
Use that provides the greatest net return on land
Geodetic Survey
Uses benchmarks. Not in GA.
The dominant tenant is identified as the parcel that
Uses the easement
A $576,000
Using a twelve percent capitalization rate, an apartment complex is valued at $480,000. What will be the value of the same property if a ten percent capitalization rate is used? A $576,000 B $400,000 C $520,000 D $440,000
Conversion
Using others money for your benefit
Land Contract
Vendor (seller) retains title until the final payment is met by the vendee (buyer). Buyer gets equitable title. (aka. installment contract, contract of deed, agreement of sale, bond of title)
VA
Veterans Administration
WQARF
Water Quality Assurance Revolving Fund sites
Answer: D.
Water rights relating to flowing water such as a river or stream are called _______ and rights relating to a lake or sea are called ________. A. riparian, percolating B. littoral, riparian C. aquarian, oceanic D. riparian, littoral
Answer: (A) - RESPA
What Act has as its primary purpose to educate BORROWERS regarding the costs involved in CLOSING so that the BORROWERS can shop for the best situation for them? A. Real Estate Settlement Procedures Act (RESPA) B. Equal Credit Opportunity Act (ECOA) C. Truth-In-Lending (Regulation Z) D. 1968 Fair Housing Act
Competitive Market Analysis (CMA)
What agents use to estimate a list price, make an offer or re-evaluate an existing listing
Answer: B. Outstanding debts could be pursued as a result of a deficiency judgement.
What could happen if a property is sold at foreclosure and does not bring enough money to satisfy all of the debts secured by the property? A. any obligation of the debtor terminates with the sale of the property. B. outstanding debts could be pursued as a result of a deficiency judgement. C. all monies owed must be satisfied as a result of the foreclosure sale. D. all other property owned by the debtor is automatically seized and sold at a future sale to satisfy the unpaid debt.
Answer: C. DOWN PAYMENT and MONTHLY PAYMENT are what determines the purchaser's ability to repay a loan.
What determines the purchaser's ability to repay a loan? A. employment history and credit history B. down payment and credit history C. down payment and monthly payment D. monthly payment and credit history
A. Legal life estate
What do dower and curtesy rights have in common? A Legal life estate. B Possessory estate. C Leasehold estate D Remainder estate.
Answer: A. "Conveyance" means the process of transferring property from one owner to the other. A General Warrant Deed provides the most protection for the buyer.
What instrument of conveyance affords the most protection to the purchaser? A. general warranty deed B. special warranty deed C. quit claim deed D. security deed
Answer: D. A prepayment reduces the principal on a loan before the due date and can result from a sale, the owner's decision to pay off the loan early, or foreclosure.
What is private mortgage insurance (PMI) ? A. mortgage insurance that is arranged for by the buyer privately B. mortgage insurance provided by a private mortgage insurance company C. insurance required for loans with a loan-to-value percentage in excess of 80% D. both B and C
Answer: B. Said another way, interest is the profit on money in the same way mark-up is the profit stores make on the goods they sell.
What is the BEST definition of interest? A) an upfront fee charged by a lender to process a loan B) the fee a borrower pays to a lender for the use of the money C) a fee charged by the lender to increase their equity position D) the degree and extent of the lender's holdings
Answer: B. The $20 fee is a one-time event for new licensees..except in certain instances
What is the activation fee for the original licensing as a broker, associate broker, salesperson, or community association manager? A. $45 plus an addition $20 which goes to the Real Estate Education, Research and Recovery Fund B. $45, which includes $20 for the Education, Research and Recovery Fund C. $75, plus an additional $20 for the Fund D. $75, which includes $20 for the Fund
Answer: B.
What is the maximum fine for a single violation that the commission may impose? A. $500.00 B. $1,000.00 C. $2,000.00 D. $5,000.00
Answer: D.
What is the maximum fine the Commission may impose on an individual for multiple violations? A. $1,000 B. $2,000 C. $3,000 D. $5,000
Duties
What the agent owes to the seller/buyer
Answer: (B) - Transaction Broker
What type of transaction exists when there is a written contract for a broker to receive pay from both or either party and performs only ministerial acts for one or both parties? A. double agency B. transaction brokerage C. sub-agency D. single agency
Community Property
What was mine. Husband/wife. (Not GA)
Escheats
When I property owner dies intestate and the government can find no heirs the property escheats to the state or county.
Single agency
When a broker is representing the seller or the buyer in the transaction, but not both.
Answer: D.
When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is known as what? A. caveat emptor B. surety bonding C. subordination D. subrogation
B leased fee estate
When a landlord leases property, the landlord retains a: A leasehold estate. B leased fee estate. C quiet title estate. D Remainder estate.
D The lender is required to advertise before holding a foreclosure sale
When a lender's security instrument includes the power of sale and a borrower has failed to make payments on a loan with that lender, which of the following is true? A The lender cannot foreclose until the borrower has missed three consecutive payments. B Junior lien holders must be notified before a foreclosure sale can be held. C In order to foreclose on the loan, the lender must sue the borrower in court. D The lender is required to advertise before holding a foreclosure sale.
Answer: (D) - the listing COMPANY
When a salesperson prepares an offer to purchase on a property listed with another real estate firm, he/she should recommend to the customer that the earnest money check be made payable to: A. the selling salesperson B. the selling company C. the listing salesperson D. the listing company
B a periodic estate
When a tenant is in possession of property, and the tenancy may be terminated by notice from either party, there exists: A an estate for years. B a periodic estate. C a determinable estate. D an estate at sufferance.
Dereliction
When a waterline recedes permanently, exposing additional land, it is known as:
B Separated
When air rights are sold from the rest of the land, they are: A divided. B separated. C partitioned. D severed.
Dual agency
When an agent represents two principals in the same transaction.
Answer: (C) - the date of recordation However, property taxes (special assessments) ALWAYS take first priority!
When foreclosure occurs, the payment priority of most of the outstanding debts is established by: A. the type of lien B. amount of the lien C. date of recordation D. the court
Answer: B. Commission is normally "payable" upon closing.
When is the commission normally payable? A. upon the broker bringing in a ready, willing, and able buyer B. upon closing C. upon presentation of the offer D. three days after closing
Binding Contract
When last offeree communicates acceptance of offer
Answer: C. Brokers may only deposit their own funds if necessary to maintain a minimum deposit required by the bank, to pay bank fees for maintaining the account, to cover costs for checks and deposits or other such clearly defined reasons.
When may a broker deposit or maintain his or her own funds in a trust or escrow account? A. never, under any circumstances B. anytime, so long as the funds are identified as belonging to the broker C. when the funds are clearly identified as belonging to the broker and only under specific circumstances D. under certain circumstances and with the Commission's approval
Answer: C. an aggrieved party must first file suit and win a judgment against a licensee in court and receive actual compensation less than awarded judgments. He or she then has ten days in which to notify the Fund in writing of their claim for compensation. For example, if a couple were award damages of $65,000 in a case and the most they could collect was $40,000 after exhausting all conventional channels, they could then apply to the Fund. Remember, though, even though there is an outstanding judgment of $25,000, the most they can recover from the Fund is $15,000.
When may a party appeal to the court for an order directing payment from the fund? A) Within thirty days of a obtaining a court judgment. B) Within forty-five days of obtaining a court judgment. C) Within ten days of obtaining a judgment. D) Within five days of obtaining a judgment.
Answer: B. One trust account can hold funds for multiple transactions and it's up to the broker to decide how many accounts best serve his or her needs.
When must a broker notify the real estate Commission that a trust account has been opened and what information must be provided? A. Brokers must notify the Commission within sixty days and provide the name of the bank where the trust accounts are held B. Brokers must notify the Commission within one month and provide the bank name and the account name or number for each trust account they control C. Brokers must notify the Commission within ten banking days and provide the names of all parties involved in each transaction D. Brokers must notify the Commission within seven banking days and provide the bank name only
Answer: B.
When must a broker notify the real estate Commission that a trust account has been opened and what information must be provided? A. brokers must notify the Commission within sixty days and provide the name of the bank where the trust accounts are held B. brokers must notify the Commission within one month and provide the bank name and the account name or number for each trust account they control. C. brokers must notify the commission within ten banking days and provide the names of all parties involved in each transaction D. brokers must notify the Commission within seven banking days and provide the bank name only
Unenforceable
When neither party can sue the other to force performance, the contract is said to be unenforceable. Because a real estate sales contract must be in writing, an oral agreement to purchase property is unenforceable.
Novation
When novation is granted, one contract is substituted for another contract with the intent to discharge the obligation of the original contract.
Answer: A. When obtaining an FHA loan, an FHA approved appraiser appraises the home.
When obtaining an FHA loan, which generally happens? A. An FHA approved appraiser appraises the home B. FHA makes the loan directly to the borrower C. The borrower makes the down payment directly to the FHA D. None of the above
Offer acceptance
When offeror or agent receives/deliveries notice of acceptance by offeree--then contract is created
Answer: (C) - suit to partition
When one of the owners in a concurrent ownership institutes court action to force the sale of the concurrently owned property, the court action is called: A. suit to quiet title B. specific performance suit C. suit to partition D. suit of division
The deed must be recorded in the county courthouse in which the property is located.
When properly executed a deed conveys an interest in property to the person who accepts it. Which of the following is NOT a requirement of a valid conveyance by deed?
the seller remains legally responsible for repayment of the loan
When real estate is sold "subject" to an existing loan, then:
Answer: B. Tenancy for years is the common form of rental agreements and binds all future owners for the term of the lease.
When real estate under an estate for years is sold, what happens to the lease? A. it expires with the conveyance B. it binds the new owner C. it is subject to termination with proper notice D. it is valid but unenforceable
B may deposit the earnest money into their own trust account, as long as it is approved by their broker and properly registered with the Commision
When salespersons sell their own property, they: A must always deposit the earnest money into their broker's trust account. B may deposit the earnest money into their own trust account, as long as it is approved by their broker and properly registered with the Commission. C need not deposit earnest money into a trust account, if their license is on inactive status. D Both (B) and (C).
Answer: A. A Licensee SHOULD qualify prospective buyers at the first significant meeting with the buyer.
When should a licensee QUALIFY a prospective buyer (customer)? A. at the first significant meeting with the buyer B. no later than signing the purchase and sale agreement C. after the buyer has chosen the property they wish to purchase, but before the contract is signed D. not until after the buyer's offer has been accepted
Implied agency
When the actions or conduct of the parties communicate that there is an agreement. Example: Agent says, "Take this deal. It's the best one for you."
Answer: C. Most commonly known as "restrictive covenants," such as deed restrictions are often used to maintain the consistency of a neighborhood by, for example, stipulation that only traditional home styles of a particular size and painted in traditional colors may be constructed and occupied within the subdivision. These are encumbrances on the property.
When the grantor does not wish to convey certain property rights, he or she: A. must note the exceptions in a separate document B. may not do so, since the deed conveys the entire premises C. may note the exceptions in the deed of conveyance D. must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor
Answer: (C) - Trustor "Trustor" is another name for the borrower and "trustee" is a "supposedly" neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it's the lender who requires the insurance to protect his/her position, it's the borrower who pays for it.
When the lender under a Deed of Trust requires title insurance, who would be the most likely person to pay for it? A. the mortgagee B. the trustee C. the trustor D. the beneficiary
Express agency
When the parties state the contract's terms and express their intention, either orally or in writing. Example: a listing agreement.
General agent
When the principal delegates a broad range of powers, and the relationship is expected to be ongoing. Example: Property manager or real estate agent with the agent's broker.
Special agent
When the principal delegates a specific act or business transaction. Example: a listing agent or a party with a durable power of attorney; an agent who entered into a buyer's agency agreement.
C
When using a security deed in Georgia the borrower is the: A. Mortgagor. B. Mortgagee. C. Grantor. D. Grantee.
A
Where does Fannie Mae (FNMA) obtain money to buy loans? A. From the sale of bonds and mortgaged back securities. B. From the Federal Reserve System/ C. From the primary market lenders. D. From the Government National Mortgage Association? Ginnie Mae
Answer: B. Lowest monthly payment = lowest interest, highest year Highest monthly payment = highest interest, lowest year
Which loan will give a borrower the LOWEST monthly payment? A. 10% interest, 20 year term B. 10% interest, 25 year term C. 11% interest, 20 year term D. 11% interest, 25 year term
Answer: C. Savings and loans primarily make investments in home loans. Insurance companies (A) usually make large commercial and investment loans. Commercial banks (B) make home loans but banks usually have large investments also in business loans. The FHA (D) is a "governmental" organization and only INSURES (not invests) in home loans.
Which non-governmental organization has its greatest investment in first mortgages on single family residences? A. insurance companies B. commercial banks C. savings and loans D. federal housing administration
Answer: C. Saving and Loans and Commercial Banks both have large investments in this area of financing. Who has more has fluctuated over the past 10 years, but currently Savings and Loans have the greatest investments in first mortgages on single family residences.
Which non-governmental organizations have their greatest investment in first mortgages on single family residences? A) insurance companies B) commercial banks C) savings and loans D) Federal Housing Administration
Answer: D.
Which of the following activities is illegal? A. price fixing if real property B. unreasonable refusals by real estate boards to accept new members C. rate fixing of real estate commissions D. all of the above
Answer: D.
Which of the following activities is permissible (allowed) for a broker? A. recording a listing contract that creates a lien for the purpose of causing a cloud on the title when no valid claim exists B. accepting an oral listing from an owner and placing a "For Sale" sign on the property C. obtaining an exclusive listing from an owner while knowing that another broker has the property exclusively listed D. none of the above
Names of grantor/grantee or lessor/lessee, description of the property, recital of consideration, delivery and acceptance of the instrument
Which of the following are essential to the validity of both deeds and written lease agreements?
the relative cost of credit expressed as a percentage of interest
Which of the following best describes the APR?
Answer: D.
Which of the following does a survey NOT show? A. precise legal boundaries of a property B. location of improvements, easements, rights of way C. encroachments D. location of furnishings within the dwelling
Answer: C. The main activity of the FHA is the insuring of residential mortgage loans made by PRIVATE lenders. It sets standards for construction and underwriting but does not lend money or plan or construct housing.
Which of the following does the Federal Housing Administration (FHA) do? A. lends money and plans and constructs housing B. insures residential mortgage loans made by government lenders C. sets standards for construction and underwriting D. none of the above
C Life estates always pass to the remainderman
Which of the following is INCORRECT concerning a conventional life estate? A The owner is called the life tenant. B The owner does not have to die for the estate to end. C Life estates always pass to the remainderman. D A life estate may be sold, leased, or mortgaged.
Answer: D. Statutory redemption is what allows you to recover your property after a foreclosure
Which of the following is NOT a characteristic of Truth-In-Lending (Regulation Z)? A. disclosure of costs B. advertising C. APR D. statutory redemption
Maximum loan amount by law
Which of the following is NOT a characteristic of a VA backed loan??
Answer: D. The company you make your loan payments to is "servicing" your loan by processing payments, sending statements, managing the escrow account, providing collection efforts on delinquent loans, making sure insurance and property taxes are made, handling pay-offs and assumptions and other services.
Which of the following is NOT part of loan servicing? A. processing payments, sending statements B. managing the escrow account C. handling pay-offs and assumptions D. sending a monthly statement to the owner
Answer: (B) - Grantee's signature You do not need the buyers signature for a deed to be valid, you only need to have the grantee clearly identified in the deed.
Which of the following is NOT required for a valid deed? A. grantor's signature B. grantee's signature C. consideration D. granting clause
...
Which of the following is NOT true of "amortization"? A. over time the interest portion increases as the loan balance decreases B. over time the interest portion decreases as the loan balance decreases C. over time the amount applied to principal increases so the loan is paid off in the specified time D. none of the above
Answer: A. Annual percentage rate is NOT the note rate on your loan. It is a
Which of the following is NOT true of annual percentage rate (APR)? A. it is the note rate on your loan B. it is not the note rate on your loan C. it is a value created according to a government formula intended to reflect the true cost of borrowing and expressed as a percentage D. it is always higher than the actual note rate on your loan
Answer: C. The Commission is a SEPARATE budgetary unity from the state government and may set or adjust its own fees
Which of the following is TRUE of the Georgia Real Estate Commission (GREC)? A. it is funded through the state budget B. it does not have the authority to set or adjust licensing or other fees C. Its budget is separate from that of the general state budget D. It's part of the state budgetary unit, but may set or adjust its own fees
A
Which of the following is a lender in the primary mortgage market that would make a loan directly to a prospective borrower? A. Mutual savings banks. B. Federal Housing Administration (FHA). C. Federal Home Loan Mortgage Corporation (FANNIE MAE). D. Government National Mortgage Association (GINNIE MAE).
D failing to give copies of the closing statement to clients at the closing
Which of the following is considered to be an "unfair practice" of the License Law? A Maintaining more than one trust account. B Acting as a real estate broker or salesperson without a license. C Offering free gifts to influence prospective buyers. D Failing to give copies of the closing statement to clients at the closing.
Answer: C.
Which of the following is not true of the Commissioner? A. he or she is hired by the Commission B. he or she may hold an inactive license C. he or she is appointed by the Governor and approved by the Senate D. he or she is a full time employee
Answer: B.
Which of the following is the best way to ensure that there are no encroachments and verify the boundaries of a parcel of land? A) Write a legal description. B) Get a survey. C) Find the monuments. D) Verify the benchmark. ON STATE EXAM!
Answer: D. Second mortgages carry higher risk for lenders because because they're "second" in line after the first mortgage holder. In case of foreclosure, that means the first mortgage holder is paid in full before any remaining monies are distributed. This added exposure typically results in higher interest rates.
Which of the following is true of a second mortgage? A. it has priority over a first mortgage B. it cannot be used as a security instrument C. it is not negotiable D. it is usually issued at a higher rate of interest
Answer: B. When a mortgage payment is made, it includes a payment of interest for the previous 30 days.
Which of the following is true regarding a borrower's mortgage payment assuming the payment is made on time? A. the payment includes a payment of interest for the next 30 days B. the payment includes a payment of interest for the previous 30 days C. the payment always includes equal amounts to principle and interest D. interest is always paid in advance with the mortgage payment
Answer: B. While commission members must be APPROVED by the legislature, they are NOT part of it. While five of the six members DO need to hold ACTIVE licenses, the consumer member must be free of any ties to the real estate industry in order to remain an impartial voice.
Which of the following statements about the Georgia Real Estate Commission (GREC) is TRUE? A. the commission is part of the state legislature B. the commission's role is regulatory C. all commission members must hold active real estate licenses D. no member may hold an active real estate license
C The transfer tax is based on the sales price minus any assumed loan amount
Which of the following statements regarding the Transfer Tax is true? A The transfer tax is a credit on Buyer's Cost estimate. B The tax is calculated at a rate of 10 cents per hundred dollars of the new loan amount. C The transfer tax is based on the sales price minus any assumed loan amount. D The transfer tax is usually prorated between buyer and seller.
D Love and affection
Which of the following would NOT be legally sufficient to support the consideration in a sales contract? A Money. B Property. C Service. D Love and affection.
Answer: C.
Which of the following would be exempt from Federal Fair Housing Laws? A. a FSBO who discriminated in advertising but not on race. B. a non-profit religious organization based on national origin. C. a senior citizens community where everyone was 62 years of age or older. D. an owner of a duplex investment property in renting, but never based on race. Note: "exempt" means- they don't have to abide by the rules of Federal Fair Housing
B Mortgaging clause
Which of the following would be included in a mortgage, if used in a lien theory state? A Defeasance clause. B Mortgaging clause. C Granting clause. D Discounting clause.
Answer: C.
Which of these statements about trust accounts and the Commission is TRUE? A. the Commission may examine a broker's trust account records only if an allegation of improper handling has been made B. The Commission may request, but not demand, to examine trust account records at any time C. the Commission requires every broker maintaing a trust account to agree in advance that records may be examined by one of their representatives D. trust accounts are deemed to be confidential between brokers and clients and the Commission may not examine them
a. Interest-only payments
Which one of the following characteristics is not found in a partially amortized note? a. Interest-only payments b. Partial payment of principal, full payment of interest c. Balloon payment d. Periodic fixed payments
Answer: C. With the increase volume in home mortgages, the fact is a significant amount of closing statements do contain errors and it's easier and better to correct them before closing than after.
Why is the RESPA closing statement allowed to be examined on or before closing? A. to allow the buyer to see costs at or before closing to see if he/she can get the loan at a cheaper price B. to make sure the title insurance came from the right company C. to check for mathematical errors D. to provide for special fees to specific parties for business related to the real estate transaction
Answer: (B) - The month prior to the month the payment is made.
With a traditional, fully amortized loan, the interest portion of a payment due and made on the first day of a month covers the interest for: A. the month in which the payment is made B. the month prior to the month the payment is made C. the month following the month the payment is made D. the last fifteen days and the next fifteen days
mortgagor
a borrower in a mortgage loan transaction
Easement
a certain right to use the real property of another without possessing it. It is "best typified in the right of way which one landowner
may reject the application on the basis of her employment as a lawyer
a disabled muslim lawyer responsible to a classified advertisment, applied to rent an apartment in a large complex for which she and her two young children were financially qualified to rent. the property manager: ON STATE EXAM!
Satisfaction or Release / Deed Reconveyance
a document used to transfer legal title from the trustee back to the borrower after a debt secured by a deed of trust has been paid to the lender.
inheritability
a freehold estate will in all cases have each of the following characteristics except:
metes and bounds( oldest legal description system used in the US and Georgia
a legal description of a parcel of land that begins at a well-marked point and follws the boundaries, using directions and distances around the tract, back to the place of beginning.
mortgagee
a lender in a mortgage loan transaction
graduated payment mortgage
a loan that has a fixed interest rate and negative amortization is a
Mutuality
a meeting of the minds or offer and acceptance. One of the four essential elements of all parties.
VA loan
a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). The loan may be issued by qualified lenders.
Cooperative
a multiple owner property - corporation in severalty. Condominium. Time share
testate
a person who dies has prepared a will indicating how the deceased property will be disposed of
Fiduciary
a person who is placed in a position of trust for someone else's benefit
grantee
a person who recieves a transfer of real property from a grantor
optionee
a prospective buyer or leasee, given an option
Right of First Refusal
a right given to a prospective purchaser to be able to meet the price and terms at which the owner is willing to sell the property to another party. Unlike an option, the seller is under no obligation to withdraw his property from the market.
Mechanic's lien
a statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materialmen who have performed work or furnished materials in the erection or repair of a building
Assume a retail center can be purchased for $5.5 million. The center's NOI is expected to be $489,500. A $4,000,000 loan has been requested. The loan carries a 9.25 percent fixed contract rate, amortized monthly over 25 years with a 7-year term. What will be the property's (annual) debt coverage ratio?
b. 1.19
65. An appraiser is appraising a house that had an estimated economic life of 15 years when the property was purchased 10 years ago. If the appraiser currently estimates that the house is 1/3 depreciated, what is the remaining economic life? a. 5 years b. 10 years c. 15 years d. none of the above
b. 1/3 of 15 is 5 years depreciation, leaving 10 years remaining life; 2/3 × 15 = 10.
A real estate investment is available at an initial cash outlay of $10,000, and is expected to yield cash flows of $3,343.81 per year for five years. The internal rate of return (IRR) is approximately:
b. 20 percent.
The maximum loan-to-value ratio for an FHA loan over $50,000 is approximately:
b. 98 percent.
A characteristic of a partially amortized loan is:
b. A balloon payment is required at the end of the loan term.
A jumbo loan is:
b. A conventional loan that is too large to be purchased by Fannie Mae or Freddie Mac.
Lease provisions that grant the tenant the right, but not the obligation, to do something generally result in:
b. A higher base rent.
The Institute of Real Estate Management (IRM) awards which of the following designations?
b. CPM.
The tax-benefits associated with installment sales are:
b. Captured exclusively by the seller.
Due-on-sales clauses are included in commercial mortgages primarily to protect lenders from:
b. Default risk.
If an investor is a "dealer" with respect to certain real estate, then that real estate is classified (by the IRS) as being held:
b. For sale to others
Which of the following statements is most accurate?
b. Joint ventures decrease the amount of equity capital the developer/borrower must invest in the project.
The most profitable activity of residential mortgage bankers is typically
b. Loan servicing.
Existing leases:
b. Must be considered more carefully when valuing a multi-tenant office building than valuing an apartment complex.
When the tenant pays a base rent plus some or all of the operating expenses of a property, the result is a:
b. Net Lease.
Assume an income-producing property is priced at $5,000 and has the following income stream (year 1, $1,000; year 2, -$2,000; year 3, $3,000; and year 4, $3,000). Would an investor with a required rate of return of 15 percent be wise to invest at the current price?
b. No, because the project has a net present value of -$1,954.91.
An income-producing property is priced at $600,000 and is expected to generate the following after-tax cash flows: Year 1: $42,000; Year 2: $44,000; Year 3: $45,000; Year 4: $50,000; and Year 5: $650,000. Would an investor with a required after-tax rate of return of 15 percent be wise to invest at the current price?
b. No, the NPV is -$148,867.
The most typical adjustment interval on an adjustable rate mortgage (ARM) once the interest begins to change is:
b. One year.
Taxable income from the rental of actively managed depreciable real estate is classified as:
b. Passive income.
Savings banks are now virtually indistinguishable from:
b. Savings and loan associations.
Warehousing refers to
b. Short-term loans made by commercial banks to mortgage bankers.
With an expense stop clause:
b. The landlord is responsible for operating expenses up to a specified level, above which increases in operating expenses become the obligations of the tenant.
When a property is sold for less than its remaining book value, its depreciation (wear and tear) was:
b. Underestimated.
The equity dividend rate:
b. expresses before-tax cash flow as a percent of the required equity cash outlay.
As a general rule, using financial leverage:
b. increases risk to the equity investor.
Present value:
b. is the value now of all net benefits that are expected to be received in the future.
The net present value of an acquisition is equal to:
b. the present value of expected future cash flows, less the initial cash outlay.
Equitable Redemption
before foreclosure
Easement in Gross
benefits an individual or a legal entity, rather than a dominant estate. The easement can be for a personal use (for example, an easement to use a boat ramp) or a commercial use (for example, an easement to a railroad company to build and maintain a rail line across property)
All exclusive listings are
bi-lateral, valid, expressed (written), contracts must have expiration date
Exercized Option
bi-lateral, valid, expressed (written), contracts must have expiration date
Mortgager
borrower
Loan take over (Assumption)
both liable
Bi-lateral contract- two promises
both parties promise to do something, exclusive right to sell listing contract is a bilateral contract
Blind ad doesn't have:
broker firm and number, disclosing license status
Deed grantee
buyer
The requirement of a real estate manager to act in the best interests of the landlord when dealing with a tenant is termed:
c. A fiduciary responsibility
