practice 5 q's

Your clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. How much would their principal and interest payment be per month? Plug in the numbers using the amortization chart in your resources see what the payment per month would be. Remember: The monthly payment multiplier is per $1,000 of the mortgage. $1,001.32 $1,073.64 $1,296.21 $1.347.91

$1,073.64. (The estimated payment is $1,073.64. Remember to divide $200,000 by 1,000, then multiply the factor (5.36822) by 200.)

Related to title insurance, what is "subrogation"? A covered party grants permission to the title company to pursue the party who caused a claim or loss. The act of conveyance when the seller turns over all property rights to the buyer with a clear, marketable title. The process by which the lender receives coverage under a title insurance policy the borrower has purchased. The process by which the title policy pays out any claims to the buyer or lender.

A covered party grants permission to the title company to pursue the party who caused a claim or loss.

Select the statement that accurately reflects the type of deed used for the transfer. A bargain and sale deed conveys property in a foreclosure proceeding. A deed of trust conveys real estate to a trustee for the beneficiary named in the deed. A referee's deed conveys property from one spouse to another in a divorce proceeding. A warranty deed conveys REO property from the lender

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

Sondrine's beach cottage has a right of way that allows nearby residents to get to the beach. What is the primary difference between a right of way and an easement? A right of way always has a defined expiration date. A right of way is always for an indefinite time period. A right of way offers the right to use the property for some function, as compared to just as a pass-through. A right of way provides a pass-through, but not a right to use the property.

A right of way provides a pass-through, but not a right to use the property.

Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions? A mechanic's lien recorded by A1 Siding and Windows A verbal lease agreement Martha has with her neighbor who leases Martha's garage Last year's unpaid property taxes The current year's unpaid property taxes

A verbal lease agreement Martha has with her neighbor who leases Martha's garage

Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______. Accepting liquidated damages Accepting partial performance Suing for damages Suing for specific performance

Accepting liquidated damages

A property's projected monthly potential gross income is $20,000. The assumed vacancy and loss rate is 5% and operating expenses were expected to be 45% of the property's potential gross income. The property's actual income was $16,000 and expenses were 40% of that income. How did the property's actual net operating income compare to what was projected? Actual net operating income was higher than projected. Actual net operating income was lower than projected. Projected and actual net operating income were equal. You can't determine this from the information provided.

Actual net operating income was lower than projected. (Projected net operating income is Potential gross income - Vacancy and loss rate - Operating expenses. For our example, projected net operating income is $10,000 ($20,000 - $1,000 - $9,000). Our actual net income is Income - Operating expenses (actual income accounts for any vacancies or losses that occurred during the month). Actual net income is $9,600 ($16,000 - $6,400) which is less than projected.)

Related to the legal test of a fixture, in the acronym MARIA, what do the two As stand for? Acceptability of the fixture and agreement of the parties Adaptability of item and accessibility to the property Adaptability of item to land's use and agreement of the parties Allowable use and acceptable use

Adaptability of item to land's use and agreement of the parties

Harold's clients signed the real-estate contract a couple of days ago, but the seller wishes to change the amount they are going to contribute to closing. What type of contract addition will likely be used to convey the change? Addendum Amendment Inspection Pro-rata

Amendment

Which of the following is more likely to act as a closing agent? An attorney or title company representative The broker The lender The seller

An attorney or title company representative

Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step? Arbitration A second round of mediation Condemnation Litigation

Arbitration

Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue? Arbitration Choice of law Damages block Liquidated damages

Arbitration

Tristan's offer has been signed by all parties and delivered back to the seller. This means that ______ has occurred. Acceptance Binding acceptance Notarization Personal delivery

Binding acceptance

Which of these statements about a conventional mortgage loan is true? Borrowers with larger down payments and higher credit scores are most likely to select a conventional mortgage. Conventional mortgages are non-conforming. FHA imposes loan limits (maximum loan amounts) on conventional mortgages. The government insures up to 25% of conventional mortgages for qualifying buyers.

Borrowers with larger down payments and higher credit scores are most likely to select a conventional mortgage.

When Gillian looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "Beginning at the corner of State Route 61 and Hallowell Road" represent? A benchmark Bounds Metes Monuments

Bounds

Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control? CC&R Deed restriction Law Regulation

CC&R (Conditions, covenants, and restrictions apply to an entire subdivision, while deed restrictions apply to a specifically named property.)

Christine listed her house with you. Tailleur represents the buyer, Rebecca, and the seller's mother, Freida, is paying your commission. Which of these factors determines how legal agency is determined in this situation? Christine listed the property with you. Christine's mother, Freida, owns the house you listed. Freida is paying your commission. Tailleur represents the buyer.

Christine listed the property with you.

Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it? Compare it to the Loan Estimate. File it with her mortgage papers. Take it to the closing. Use the information to compare loan costs with those of other lenders.

Compare it to the Loan Estimate.

Your buyer client, Percival, was pre-approved for the exact amount he needed to buy the home of his dreams, and he made an offer that was accepted by the seller. What's his next step? Complete a loan application. Obtain pre-approval from another lender. Review the underwriter's decision. Sign a purchase agreement.

Complete a loan application.

To make valid computations of adjustments for the market comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements has the highest priority? Conditions of sale Location Market conditions Physical characteristics

Conditions of sale

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title? As long as the chain of title is traceable for at least the past 30 years, Mario will have marketable title. Depending on his state's laws, Mario may have marketable title. Mario will have to perform his own research to find information necessary for repairing the broken link. Unless the chain of title can be tracked back to its beginning, Mario won't have marketable title.

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

Select the statement that accurately depicts property ownership income tax implications. During the ownership stage, both investors and homeowners may be able to deduct mortgage interest paid. First-time home buyers can deduct closing costs paid. Homeowners can deduct depreciation during the ownership stage; investors can't. When homeowners sell their property, they'll need to calculate the depreciable basis on the property.

During the ownership stage, both investors and homeowners may be able to deduct mortgage interest paid.

What type of leasehold is characterized by possession of a property without the express permission of the property owner, such as a situation in which a tenant continues to occupy an apartment after the lease has terminated? Estate at sufferance Estate at will Freehold estate Periodic estate

Estate at sufferance

Which type of deed conveys real property from a decedent's estate to a buyer? Deed in trust Executor's deed Quitclaim deed Referee's deed

Executor's deed

Which type of deed conveys real property from a decedent's estate to a buyer? Deed in trust Executor's deed Quitclaim deed Referee's deed

Executor's deed

Jerry and Lewis have entered into a sales contract. They're about three weeks into the transaction, with several terms of the agreement yet to be met. What type of contract do Jerry and Lewis have? Executed Executory Option Unilateral

Executory

Select the statement that accurately describes an abstract of title. A title company representative must certify the abstract of title. Few states require an abstract of title when conveying property. The chain of title documents the information found during the title abstract process. Title abstracts provide data for the title company's title search.

Few states require an abstract of title when conveying property.

Another term for a valuation is ______. Assessment Comparative market analysis Evaluation Formal appraisal

Formal appraisal

Stella owns a building in an area of town that's being revitalized. Local property owners believe property values will increase considerably over the next 10 years. Stella wants to entice long-term tenants with a low initial rent but have the flexibility to increase rent as her property's value increase. What type of lease should she consider? Graduated Gross Net Percentage

Graduated

When appraisers look past how a property is being used to determine a more optimal function, what are they determining? Cost to replace Highest and best use Market value Value in use

Highest and best use

Prior to the ______, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing. Civil Rights Act of 1866 Fair Housing Amendments Act of 1988 Federal Fair Housing Act of 1968 Housing and Community Development Act of 1974

Housing and Community Development Act of 1974

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______. By licensed real estate professionals By members of the Appraisal Foundation In the most expeditious and inexpensive way possible In writing, and in accordance with uniform standards

In writing, and in accordance with uniform standards

Hannah wasn't able to get the financing to open her boutique, so her mother came on as a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this? Arbitration Choice of law Damages block Indemnification

Indemnification

What type of value may consumers be interested in if they are looking for the potential rate of return? Assessed value Insured value Investment value Value in use

Investment value

Jordan works as a property manager for several residential property owners. When she receives security deposits from tenants, how long does she have to deposit them into an escrow account? It depends on her state's requirements. She has seven business days. She has three business days. There is no deadline.

It depends on her state's requirements.

Jane is selling her home to Micah. What must occur for Jane to effect a transfer of title to Micah? Jane must accept the deed. Jane must deliver the deed to Micah. Micah must acknowledge the deed. Micah must sign the deed.

Jane must deliver the deed to Micah.

What's the relationship between the Loan Estimate and the Closing Disclosure? Lenders issue the Loan Estimate to verify the figures detailed on the Closing Disclosure. Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate. Loan Estimate figures should match Closing Disclosure figures exactly. The Closing Disclosure outlines the lender's responsibilities to the borrower.

Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate.

Leo's client is looking for a property with at least 2,500 finished square feet. He finds a 2,200-square-foot property with all the other features the client is looking for and purposely fails to mention the square footage. His client agrees to look at the property, falls in love with it, and wants to make an offer. Which of these statements accurately represents Leo's level of misrepresentation in this situation? Because Leo didn't state the square footage, he's not guilty of misrepresentation. It's the buyer's responsibility to ensure that the property has the proper square footage, so Leo's in the clear. Leo obviously knew about the square footage and intentionally didn't mention it. He's guilty of intentional misrepresentation. Leo omitted a material fact. This is considered unintentional misrepresentation.

Leo obviously knew about the square footage and intentionally didn't mention it. He's guilty of intentional misrepresentation.

When agents put their clients' interests ahead of their own, this describes the duty of ______. Accounting Loyalty Obedience Reasonable skill and care

Loyalty

Most often, what's the first course of action for disputed home warranty claims? Arbitration Condemnation Litigation Mediation

Mediation

Mardee represented condo owner Carol, and they signed an exclusive agency listing agreement. If Carol found her own buyer, would she owe Mardee a commission? No, because Carol is not a real estate licensee. No, because Carol procured the buyer. Yes, because they have an exclusive agency listing agreement. Yes, but she only owes the listing commission.

No, because Carol procured the buyer.

Which of the following statements is true about conventional loans? Originators usually package and sell the loans on the secondary market. They're guaranteed by the U.S. Department of Veterans Affairs. They're insured by the Federal Housing Administration. They're provided by the U.S. Department of Agriculture.

Originators usually package and sell the loans on the secondary market.

Gene, a real estate licensee, prefers to use electronic documents and signatures because it means he doesn't have to track people down to deliver documents or have them signed. Which of these statements is true? Brokerage firms can require that clients accept the use of electronic documents and signatures. Licensees can require clients to accept the use of electronic documents and signatures. Parties to the contract decide whether or not to accept the use of electronic signatures and documents. Some states require the use of electronic documents and signatures in real estate transactions.

Parties to the contract decide whether or not to accept the use of electronic signatures and documents.

The government's authority at all levels to ensure the health, safety and welfare of its citizens, which includes the control of public land use is the definition of ______. Condemnation Eminent domain Police power Sovereignty

Police power

Which of the following is a characteristic of an abstract of title? Provides an attorney's opinion of the title Provides information about the payoff amount Provides information about the property location Releases an existing lien

Provides an attorney's opinion of the title

When a buyer finances a newly built home with a Federal Housing Administration loan, FHA requires the builder to ______. Create a fund equaling 20% of the home's cost set aside to cover construction defects for the next 10 years Provide a builder-backed home warranty Provide the buyer with a 30% discount on materials and labor for home repairs Purchase a third-party home warranty to protect the buyer

Purchase a third-party home warranty to protect the buyer

In many cases, property managers must get explicit permission in order to disburse funds from a trust account. What is one common way to do so without this explicit permission? Ensure the bank has a signature card for the property manager. Give the property manager a power of attorney. Have all who supply trust funds sign waivers. Put it in the property management agreement.

Put it in the property management agreement.

Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property? Ensure that Cheng signs the deed. Ensure that he signs the deed. Purchase title insurance. Record the deed in his name.

Record the deed in his name.

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded? He can't legally make any improvements to the property until the deed is recorded. He doesn't legally own the house until that occurs. Recording provides actual notice that he owns the property. Recording provides constructive notice that he owns the property.

Recording provides constructive notice that he owns the property.

What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways? Groundwater Littoral Riparian The doctrine of appropriation

Riparian

Sheila is unable to use her designated timeshare week this year. What will happen? She can exchange the week for another. She won't have to pay the annual maintenance fee this year. The owners association will reimburse her for the week. There is nothing she can do if she can't use the week.

She can exchange the week for another.

The appraisal report submitted to Jenkins, the lender, notes that the property is being conveyed with all property rights intact. Which step in the appraisal process does this represent? Determine highest and best use. Estimate the land value. Gather and analyze data. State the problem.

State the problem.

Kenneth plans to shop around for his mortgage loan to be sure he's getting the best interest rate and terms. What lender-provided document outlines loan rates and fees so he can make comparisons? Kenneth's settlement statement details all closing costs, so he can use it to compare lender loan products. The buyer's net sheet provides all the figures necessary for comparing loan products. The Closing Disclosure discloses all loan costs, so he can compare costs between lenders. The Loan Estimate permits Kenneth to comparison shop.

The Loan Estimate permits Kenneth to comparison shop.

A "homes for sale" magazine contains the following ad: "Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!" Which of these statements is true? The ad is in compliance with TILA because it doesn't contain any of the trigger terms that require full disclosure of all financing terms. The ad is in compliance with TILA because the sales price is below the minimum that triggers full disclosure. The ad is not in compliance with TILA because financing terms must be provided on any residential real estate ad. The ad is not in compliance with TILA because it mentions financing without including all of the terms of the financing.

The ad is in compliance with TILA because it doesn't contain any of the trigger terms that require full disclosure of all financing terms.

Who is responsible for following up on issues identified in the inspection report to ensure that they are addressed? The buyers The buyer's agent The listing agent The sellers

The buyer's agent

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

The covenant against encumbrances

Henrietta is 17 years old. She wants to sell the property given to her by her grandmother. Which covenant provided by the general warranty deed may prevent her from doing so? The covenant of further assurances The covenant of seisin The covenant of the right to convey The covenant of warranty

The covenant of the right to convey

Which fiduciary duty may continue even after the transaction closes? The duty of accounting The duty of disclosure The duty of obedience The duty of reasonable skill and care

The duty of accounting

Aidan accepted a contract for the sale of his home. The home inspection report reveals that certain aspects of the house don't meet the current building code. What's the most likely result? Aidan and the purchaser will negotiate the expense of bringing the house up to code. Aidan must bring the house up to code. The contract will fail to close because of code violations. The house is probably not required to meet the current code.

The house is probably not required to meet the current code.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean? Carly's lender decided to further audit her loan application materials. The banking association is auditing the lender's foreclosure files. The federal government is auditing the lender's foreclosure process. The lender has requested a title audit to ensure that the foreclosure was properly handled.

The lender has requested a title audit to ensure that the foreclosure was properly handled.

What does an REO on a lender's assets mean? The lender has agreements with real estate listing agents. The lender owns real estate after a foreclosure sale. The lender prepares property management agreements. The lender received proceeds from a foreclosure sale.

The lender owns real estate after a foreclosure sale.

When purchasing a short sale or foreclosure, what's one of the biggest frustrations buyers face? Insurance companies' refusal to insure homes sold as distressed properties Restrictions on the amount a lender will finance on a distressed property The difficulty of finding a real estate professional to help them with the purchase. The length of time it takes to purchase a distressed property

The length of time it takes to purchase a distressed property

Landlords must abide by all fair housing, civil rights, and ADA regulations as well as comply with all state and federal landlord-tenant legislation. What responsibility does the property manager have related to this? ADA regulations don't impact residential housing units, so neither the landlord nor the property manager is responsible for these regulations. The landlord is solely responsible for upholding all these laws and regulations. The property manager, as the day-to-day manager for a property, is the only one liable for upholding these laws and regulations. The property manager, as the landlord's general agent, is responsible for upholding all the laws and regulations required of the landlord.

The property manager, as the landlord's general agent, is responsible for upholding all the laws and regulations required of the landlord.

Which of these situations is addressed by the fiduciary duty of disclosure? The buyer fails to disclose to the seller his need to close on the property quickly. The buyer's home inspector refuses to share the inspection report with the seller. The seller refuses to complete a property disclosure form. The seller's agent fails to disclose a conflict of interest.

The seller's agent fails to disclose a conflict of interest.

In which of these situations would the property most likely be conveyed with a trustee's deed? Karla is the executor of her father's estate and is selling his farm. Marvin and Tricia are selling their house. Tim's property will be sold at auction in a foreclosure action. TLC Lending is selling an REO property.

Tim's property will be sold at auction in a foreclosure action.

What type of insurance protects a lender's collateral interest in a property that's being financed? Collateral insurance Hazard insurance Mortgage insurance Title insurance

Title insurance

Why is it important to publicly record a deed? The title insurance policy schedule of exceptions will include anything that's publicly recorded. Title insurance policies don't cover publicly recorded events. Title insurance policies must be publicly recorded to be legal. Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

What's the purpose of a chain of title? To determine whether encroachments exist and to determine the boundaries of the property To establish history of past ownership To establish proof of insurance To insure the policy owner against financial loss if the title to the real estate has covered defects

To establish history of past ownership

A quitclaim deed does which of these? Transfers a property with only the covenant of warranty Transfers the property with full covenants Transfers without warranty any interest or title the grantor has when conveying it Transfers with warranty any interest or title the grantor has in the property when conveying it

Transfers without warranty any interest or title the grantor has when conveying it

While walking around the exterior of a rural home she's inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard? Capped well Radon vent system Septic system Underground storage tank

Underground storage tank

How long does the borrower have to pay private mortgage PMI insurance? 12 years 20 years Until 50% of the original loan is paid off Until the borrower reaches a 22% equity position

Until the borrower reaches a 22% equity position

Which of the following can be defined as what a property is worth? Appraisal Cost Price Value

Value

Corinne, an escrow agent, is preparing for the Thomas/Trenton closing in four days. Which of these documents will Corinne prepare? She'll prepare a seller net sheet to disclose the seller's net profit on the sale. Working with the lender, she'll prepare the Loan Estimate, which details the costs the buyer and seller will pay at closing. Working with the lender, she'll prepare the settlement statement, which details the costs the buyer and seller will have at closing. Working with the title company attorney, she'll prepare the preliminary title commitment.

Working with the lender, she'll prepare the settlement statement, which details the costs the buyer and seller will have at closing.

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee? Borrower Lender Loan Property

Lender

Broker Sam has extended an offer to licensee Jane, who has accepted the offer. Jane will work as an independent contractor for Sam. Based on this, which of the following statements is true? As an independent contractor, Jane will not have to fill out any tax-related or IRS-related paperwork. It is up to Jane whether or not she wants to have taxes withheld from her pay. If she does choose to have taxes withheld, she must complete a W-4. Jane will need to fill out a W-4 for tax withholding information. Jane will need to fill out a W-9 for IRS reporting purposes.

Jane will need to fill out a W-9 for IRS reporting purposes.

In which of these situations is Ronna's fiduciary duty of reasonable skill and care at odds with her duty of obedience? Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer. Ronna's buyer client asked her to keep his financial situation confidential. Ted, Ronna's broker, insisted that she teach a contracts class, even though she's a new agent. Though her customer was adamant, Ronna turned down a commercial listing because it was outside her area of expertise.

Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.

Jim represents Joel in the sale of Joel's country acreage and house. Jim's business partner, Rolly, informed Jim that he wants to put an offer in to purchase the property, with the intention to subdivide it. Which statement best represents the disclosure requirements regarding this transaction? Because Jim isn't buying the property for himself, he has no disclosure requirements. Jim may disclose that he's partners with Rolly, only if Rolly agrees. Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property. Rolly must disclose that he and Jim are business partners.

Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property.

Which statement most accurately describes the type of notice provided by recording a change of ownership document? Recording the deed provides actual notice of the property sale. Recording the deed provides constructive notice of the property sale. Recording the new owner's title policy serves as constructive notice of the sale. Recording the promissory note provides constructive notice of the property sale.

Recording the deed provides constructive notice of the property sale.

Phoebe is careful to never act outside of her scope of expertise. She's a real estate professional and proud of it, so when asked for advice about legal matters, inspection results, flaws in construction, or shoddy building materials, she always refers them to a professional in that field. Which duty is Phoebe demonstrating? The duty of accounting The duty of loyalty The duty of obedience The duty of reasonable skill and care

The duty of reasonable skill and care

Which statement regarding fee simple defeasible estates is true? A fee simple absolute estate becomes fee simple defeasible when the owner dies intestate. A fee simple defeasible estate is granted upon the completion of a court-ordered condition. The estate includes only some of the bundle of legal rights; inheritability isn't included. The estate includes the full bundle of legal rights, but ownership is based on a condition.

The estate includes the full bundle of legal rights, but ownership is based on a condition.

Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid? No, the contract is missing a legal object. No, the contract is missing offer and acceptance. No, the contract is void. Yes, the contract is valid.

Yes, the contract is valid.

When you're representing a client in a real estate transaction, what's your responsibility regarding tax advice? You must be able to advise your clients on the best way to minimize their tax liability related to a purchase or sale. You must not address tax aspects of a transaction in any way, since this would be working outside your area of expertise. You're obligated to answer all questions the clients have regarding property taxes and general tax advice. You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.

You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.