Practice Questions to Study

Lessor The mortgagor is the borrower. In this circumstance, the borrower is most likely the lessor, or the landlord.

12 Garden Street is currently rented out for $4,000 a month. It has a monthly debt service of $3,300 per month. With respect to this property, the mortgagor is most likely the: - Lessor - Lessee - Lender - Condo association

Hardwired Properties built or substantially renovated after 2011 must have hardwired smoke detectors. Prior to 2011, buildings have different requirements depending on the number of units in the building. That said, even 6+ unit buildings built prior to 2011 are required to have hardwired smoke detectors.

A 6+ unit home must have what kind of smoke detectors installed: battery, hardwired, battery or hardwired, none of the above?

Cloud on title A Lis Pendens is a publicly recorded notice that a property's ownership is subject to litigation. It is an issue with property ownership, and is therefore classified as a "cloud on title."

A Lis Pendens is: cloud on title, a lien, a judgement, a pending listing?

Charging a 20% commission Real estate commissions are determined by negotiation between the agent and the client; there is no standard commission rate.

A Real Estate Salesperson may lose their license for any of the following EXCEPT: - Failure to give all parties a copy of the contract - Failure to disclose defects in the property - Charging a 20% commission - A finding by the Massachusetts Commission Against Discrimination

Quitclaim deed A quitclaim deed is a deed that makes no promises about the quality of title (ownership) being conveyed. Banks typically use quitclaim deeds when selling foreclosed property so that they do not have liability for any title defects affecting the property.

A bank selling a foreclosed property at auction is likely to use what sort of deed: bargain & sale deed, special warranty deed, warranty deed, quitclaim deed?

Personal property Bills of sale (or receipts) transfer ownership of personal property.

A bill of sale is used to convey what: real property, personal property, property by will, none of the above?

Sue their broker Salespersons are owed their commissions by their broker. The salesperson's best recourse in this instance is thus suing their broker. While complaining to the Real Estate Board might also be prudent, they only handle licensing conflicts; they would not handle a dispute about payment.

A broker is unlicensed, and as a result a salesperson in the office is not paid by their client, who claims they do not have to pay their commission. The salesperson should: sue their client, complain to the Real Estate Board, sue their broker, prevent the sale from taking place to secure payment?

Encapsulation refers to sealing off a hazard such as asbestos or lead paint.

Encapsulation refers to: sealing a hazard like asbestos, covering a toxic with soil, charging extra points on a 2nd mortgage, covering multiple properties with the same loan?

6D Closing Certificate Massachusetts law requires a 6D closing certificate for all condominium sales to establish the status of the condominium fees as of the date of sale.

How does the seller of a condominium show they have paid all of their association fees when selling: title 111 certificate, 6d closing certificate, title V, security certificate?

There are 640 acres in a square mile.

How many acres are in a square mile: 100, 400, 500, 640?

5 There are 5 Board members. 3 are brokers with 7+ years experience, and 2 are members of the public.

How many members comprise the Board of Registration: 3, 5, 7, 12?

2 - Three of the Board members must be brokers with at least 7 years or more experience, and 2 members must be unlicensed and represent the public. The answer to this question is therefore 2.

How many members of the Board of Registration are unlicensed as brokers: 1, 2, 3, 5?

7 Brokers on the Massachusetts Board of Registration must have at least 7 years of experience.

How many years experience as a broker must a member of the Board of Registration have 1, 3, 5, 7?

$2000 rent x 300 GRM = $600,000 value. GRM is how many months of rent it takes for a rental property to pay for itself. It is an at-a-glance evaluation that a real estate investor can perform, often as preliminary research to see if a property is viable as an investment.

How much is a house renting for $2,000 a month worth, if the average monthly GRM in an area is 300?

Rights may be lost due to inaction The Doctrine of Laches is a legal "use it or lose it" that states that an unreasonable delay in the assertion of your rights can result in a loss of those rights.

The Doctrine of Laches states that: encroachments are unimportant, recording land is necessary for deed validity, deed restrictions must be in writing, rights may be lost due to inaction

Still in force The listing agreement is still in force as between the client and employing broker.

Trina lists her home with Samantha, a salesperson. Samantha passes away before the listing expires. What is the status of the listing: void, still in force, voidable, not enough information?

An exception to the fair housing laws is permitted for the sale, rental or occupancy to its own members of dwellings owned or operated by a religious organization for non-commercial purposes if membership in that religion is not based on exclusion of a protected class.

Under MA Fair Housing Law which is permissible: refusing section 8, refusing Russians, refusing to rent with children under 6 or a church refusing to rent to people outside of its congregation?

Section 36 is on the southeastern most section of a township map, directly below section 1, in a government rectangular survey. Since each section is 1 mile, and a township is 6 miles by 6 miles, section 36 begins 4 miles below the end of section 1.

What is the shortest distance between section 1 and section 36 in the same township: 2 miles, 4 miles, 6 miles or 8 miles?

Auctioneers Certain persons don't need a real estate license to perform real estate functions under Massachusetts law, including auctioneers.

Which person is exempt from licensing requirements when performing real estate services: brokers, salespersons, auctioneers, none of the above?

Cooperative Real estate owned in severalty as one owner. In a cooperative, the corporation owns the property, and the occupants of the property own shares in the corporation. The real estate in a cooperative is therefore owned in several (it has one owner, the corporation).

Which real estate is owned in severalty: estate in common, interest in entirety, estate for years, cooperative?

Employing broker All compensation payable to a salesperson must come from the employing broker only. Any money given to a salesperson by the client (principal) must be accepted on behalf of the broker and immediately delivered to the broker.

Who can receive compensation directly from the principal: managing broker, salesperson, associate broker, employing broker?

Seller Escrow account deposits are client money. Legally the seller is the only person entitled to hold escrow money, but the seller's broker often holds the deposits with the written consent of both the seller and the buyer.

Who is legally entitled to hold an escrow deposit: buyer, seller, agent, salesperson?

Escrow immediately Escrow deposits are client money and must be immediately placed in the escrow account by broker.

Jane is a broker and accepts a deposit made out to her firm for $5,000. What is her legal requirement: place it in the business account, place it in escrow within 7 days, place it in escrow immediately, hold the check for 7 days?

All of the above. Both seller's and buyer's agents are required to inform the buyer of any material defects impacting the subject property, even if the seller wants to keep the defects confidential.

Who is required to disclose known facts that materially affect the property: listing agent, buyer's agent, salesperson, all of the above?

The State Legislature makes the real estate laws for Massachusetts, and they are permanent unless otherwise stated. The Board enforces the laws.

Who makes real estate law: board of registration, board of realtors, state legislature or governor?

Attorney in fact An attorney-in-fact is someone holding a written "power of attorney" to act for another (allowing them to act as a proxy for another).

Who may accept a full price offer on behalf of another: attorney in fact, agent, broker, brother?

DEP The Massachusetts DEP, or Department of Environmental Protection, oversees Massachusetts environmental laws.

Who oversees Massachusetts environmental laws? - EPA - DEP - CWA - CERCLA

Cooperatives are owned by the corporation. The individual apartment owners own shares in the corporation, which grant them the right to a proprietary lease to their individual unit. They do not directly own their real estate under the cooperative.

Who owns the building in a Cooperative: condo association, the corporation, individuals, investors?

Grantor An excise fee is another term for recording stamps, and are an expense paid by the grantor (seller) when the deed is recorded at the county registry of deeds. Plus all of the other options are the same person ;)

Who pays the excise fee: grantor, grantee, buyer, optionee?

Unilateral Jamie has the option, under the agreement, to purchase the property within a certain time-frame. Only one party has therefore made a "concrete" promise: Judy promises to sell if Jamie wishes to buy. The agreement is therefore unilateral.

Judy (optionor) promises to extend an option to Jamie (optionee). Jamie promises to consider the option. This contract is: - Bilateral - Accepted - Voidable - Unilateral

Criminal history is not a protected class. The rest of the answers are covered by Federal fair housing law: drug addiction is a disability and is protected under the Fair Housing Act Amendments of 1988, country of origin is covered by the Fair Housing Act of 1968, and occupancy limits of 1 person per bedroom are prohibited familial status discrimination under the Fair Housing Act Amendments of 1988.

Landlords may screen tenants on which of the following bases: addiction to drugs, country of origin, criminal history, max 1 occupant per bedroom?

Margaret's tax benefit will be $9,023 x 0.27 = $2,436.21 (rounded down).

Margaret is in the 27% tax bracket. She paid $9,023 in mortgage interest on her primary residence last year. Her reduction on her tax bill is?

The charity holds a remainder interest in Mark's property, and is the remainderman.

Mark grants ownership of his home to a charity, but keeps a life estate for himself. The charity's interest is a(n): reversion, remainder, pur autre vie, trust?

Mark's maximum loan will be based on a DTI (debt to income ratio) of 28%. This means that he can afford monthly payments of $4,800 x 0.28 = $1,344. If the bank will lend to him at a PI factor (Principal and Interest factor, which is the monthly payment for a $1,000 loan) of $5.67, he can afford a home loan of $1,344 / $5.67 = 237.037 x $1,000 = $237,037.04 (rounded to $237,037).

Mark's income is $4,800 per month. Mark's bank will give him a loan with a PI factor of $5.67, based on a PI DTI of 28%. What is the most expensive home loan that Mark can afford based on these factors?

Equitable title Martha has equitable title to the property, which is a future right to acquire legal title (legal ownership). Under the installment sales contract, Martha will not receive a deed from Jim transferring ownership of the property to her until she makes her final payment.

Martha entered into an installment sales contract with Jim to purchase 101 Hanover Street. Under the contract, she makes monthly payments of $1000 to Jim for the next 5 years. It is currently year 2 of the contract. Martha has: equitable title, legal title, tenuous title, secured title?

Ben is the lessee (tenant) and optionee (recipient of the option).

Mary leases her home to Ben for 24 months. Ben's lease contains an option to renew the lease for another 24 months at the end of his initial least term. Ben is: lessee/optionor, lessor/optionee, lessee/optionee or lessor/optionor?

General warranty Mary likely used a general warranty deed, which usually include a covenant of warranty forever.

Mary sold a vacant lot of land to Bill. In the deed transferring ownership of the lot, Mary included a covenant of warranty forever. Mary likely used what type of deed? - General warranty - Special warranty - Quitclaim - Bargain and sale

$40,000 The FTC Do Not Call List prohibits unsolicited business calls to residential phone numbers on the Do Not Call List, as well as mobile phone numbers. Fines for violations are up to approximately $40,000 ($40,654) per call as of 2017.

Maximum fines under FTC Do-Not-Call are about: $5,000, $16,000, $40,000 or $100,000 all per call?

Life tenancy Privity of estate is the interest two parties simultaneously share in the same property. It is established in all of these agreements (which are different types of rental agreements), except for a life tenancy (also known as a life estate). Remember: estate, interest, and tenancy are interchangeable.

Privity of estate is NOT established in a(n): periodic interest, estate at will, life tenancy, leasehold?

Generally speaking probate will occur where the property is located and where the deceased last resided (but not where they passed away).

Probate proceedings involving real estate will take place: county of the property, county where the deceased lived, county where the devisee's live or county of the executor's choosing?

The Capitalization Rate is the percentage of the property's value it receives as Net Operating Income (NOI) every year. To calculate the expected NOI for this property, we would calculate what number is 5% of $500,000: $500,000 x 0.05 = $25,000 NOI

A building is on sale for $500,000. Buildings of this sort typically have a capitalization rate of 5%. What would an investor anticipate the net operating income be for this property?

40 units Property developments with more than 25 units, or lots sized more than 20 acres each, must be registered with the Consumer Financial Protection Bureau when sold on an interstate basis.

A property development that must be registered for interstate sale with the Consumer Financial Protection Bureau might have: - 20 units - 40 units - Lots sized 5 acres - Lots sized 15 acres

First determine the total square footage of the property; then divide the sales price by the total square feet to calculate the price per square foot. So, 400 feet x 300 feet = 120,000 total square feet. $210,000 sales price / 120,000 total square feet = $1.75 per square foot.

A property sized 400 feet by 300 feet sold for $210,000. What was the price per square foot of the property?

196 The Gross Rent Multiplier (GRM) is how many months of rent it takes for a property to pay for itself. To calculate the GRM, divide the property value by its rent: $275,000 / $1,400 = 196

A property worth $275,000 rents for $1,400 per month. What is the Gross Rent Multiplier (GRM)?

Turn the check over Any money given to a salesperson by the client (principal) must be accepted on behalf of the broker and immediately delivered to the broker. A salesperson is not permitted access to the escrow account, only the broker.

A buyer gives a sales associate a binder check made out to the seller. The sales associate should: immediately turn the check over, deposit it to escrow, hold the check until close, hold the check until the offer is accepted.

You must tell them if asked A property that is the scene of a murder may constitute a stigmatized property. The seller's agent is not obligated to disclose this stigmatizing information to a prospective buyer and should not volunteer it because it may hurt the seller's ability to find a buyer. However, if asked directly by the buyer or buyer's agent, seller's agent must answer truthfully. The buyer's agent has an affirmative duty to disclose the information to the buyer under their duty of full disclosure.

A buyer is concerned that a murder occurred on a property you are offering for sale. You know that a murder took place. Which is true: you must tell them if asked, you must tell them affirmatively, you must keep the information confidential, it is incumbent upon the buyer to search the public records?

Bilateral Bilateral contracts involve a simultaneous exchange of promises between the contracting parties.

A contract involving a simultaneous exchange of promises is: unilateral, bilateral, executory, executed?

Severalty Ownership by one person (even a corporation) is ownership in severalty.

A corporation is recognized as an artificial, or "legal" person. Property owned solely by a corporation is owned in: common, joint, trust, severalty?

MA Real Estate Board decisions can be appealed within 20 days.

A decision made by the Massachusetts Real Estate Board can be appealed within: - 7 days - 10 days - 20 days - 30 days

90 day suspension Second violations of Massachusetts Fair Housing Law are punished by an automatic 90 day suspension. First time violators receive an automatic 60 day suspension.

A finding by MCAD that a broker has violated fair housing law for the second time in two years is punishable by: 60 days suspension, 90 day suspension, $500 fine, $20,000 fine?

Life estate A Habendum Clause is a "to have and to hold" clause in a deed which defines or limits the quantity of the estate granted. For a life estate, the deed will specify in a habendum clause who receives the life estate upon the grantee's death. Such a clause is not necessary to convey a fee simple interest.

A habendum clause is required if transferring: life estate, encumbrance, real property, a lease?

The home inspector brochure must be provided to prospective purchasers of real estate "before the purchase and sale agreement is signed"

A home inspection brochure must be provided to all buyers in Massachusetts when: The offer is made The offer is accepted Before the P&S is signed After the P&S is signed

90 days If a child under the age of 6 lives in the home, or someone living in the home becomes pregnant, the property owner must de-lead within 90 days. There are no exceptions or waivers permitted, and the requirement applies to all owners of residential real estate, except for vacation rentals (rentals lasting less than 100 days).

A home is built prior to 1978. One of the owners becomes pregnant. How long do they have to de-lead: 60 days, 90 days, 1 year, no requirement to de-lead since this is not a rental?

Can be sold but must be disclosed Hazards like radon (an odorless, colorless radioactive gas created by the breakdown of naturally occurring minerals) do not prevent the sale of real estate. That said, their presence must be disclosed to prospective buyers.

A home is contaminated by radon. Which is true: - the home cannot be sold until decontaminated - - the home can be sold - the home can be sold but the radon must be disclosed - a broker cannot sell the home, but the owner may sell it on their own

First, calculate the loan amount: $100,000 x 0.8 = $80,000 loan. Next, calculate the monthly interest: $80,000 x 0.09 = $7200 / 12 = $600. Then calculate the amount of your monthly payment left after paying the loan interest: $742 - $600 = $142. Finally, calculate the loan balance outstanding after you pay this amount down: $80,000 - $142 = $79,858

A home is paid for with an 30 year amortized loan for 80% of the $100,000 purchase price at 9% annual interest. If your monthly payment if $742, what is the outstanding principal after the first payment?

$4,906 Property taxes are calculated on the assessed value of the property, so that's the first place to start: $500,000 x 0.44 = $220,000 assessed value. The tax rate is $2,23 per $100, so the property taxes are: $220,000 / 100 = 2200 payments x $2.23 = $4,906 annual tax bill.

A home is valued at $500,000 and assessed at 44% value for tax purposes. It is taxed at $2.23 per $100. How much is the tax bill?

Take action in court Homeowners Association Covenants (the rules in a subdivision) must be enforced by court order.

A homeowner in a subdivision paints their house yellow, which is prohibited by the subdivision. What may the other homeowners do: take action in court, repaint their house, foreclose, all of the above?

$1.60 $475,000 Market Value x 75% Assessment = $356,250 Assessed Value. $5,600 tax paid / $356,250 Assessed Value = 0.0157 rate x $100 = $1.57 town tax rate per $100 value, round up to $1.60.

A homeowner pays $5600 in taxes on their home this year. If their market value was $475,000 assessed at 75% what was the town tax rate per $100 of value?

CLUE The Comprehensive Loss Underwriting Exchange records past consumer claims, and is used in homeowner's insurance underwriting.

A homeowner's insurance underwriter would use which of the following when underwriting a property: The Homeowner's Insurance Almanac, The Comprehensive Loss Underwriting Exchange, The Comprehensive Liability and Compensation Authority, 21E maps?

Avulsion is the sudden removal of land by action of water, and the deposit of the removed land on a neighboring property. It is what likely occurred in this example.

A large storm hits Mary's property, washing away a substantial portion of her beach. When she goes outside after the storm, she notices that her neighbor's beach seems to be much larger than before. This is likely an example of: - Avulsion - Alluvion - Alluvium - Accretion

Usury is charging a higher rate of interest than legally allowed, so this would be a usury law.

A law that prevented someone from charging 50% interest would be a(n): high interest law, laches law, usury law, fraud law?

Executory and bilateral A lease is bilateral (both parties make a promise) and executory (not yet completed), even if it contains an option (which is typically an executory and unilateral contract).

A lease that contains an option to purchase is: - Executory and unilateral - Executory and bilateral - Executed and unilateral - Executed and bilateral

Gross lease Gross leases are where the tenant pays rent, and the landlord pays the building's operating expenses (as opposed to a net lease, where the tenant also pays the building's expenses). The tenant paying for unit expenses like utilities would not make the lease a net lease, so this lease would be a gross lease.

A lease where the tenant pays a fixed rent, plus the heat, the hot water, and the electricity, is known as a: Residential lease Net lease Triple net lease Gross lease

Redlining refers to credit discrimination and is prohibited by the Equal Credit Opportunity Act (ECOA).

A lender offers a different interest rate to his Hispanic clients than he does to his other clients. This is: redlining, blockbusting, acceptable, steering?

Lose license Salespersons must not have access to client escrow accounts; this would subject both the salesperson and employing broker to possible loss of their license. Only the broker may access and control the escrow account.

A licensed salesperson has signing power over an escrow account. The following is most accurate: they manage the office, the broker will lose their license and the salesperson may as well, the broker must accept the funds for the office, the salesperson may accept the funds for the office?

Broker. A broker may work independently and hold escrow funds, but doesn't have to work for themselves. A broker may instead decide instead to work under another broker, but they will still be a broker under the law.

A licensee who has passed the broker's state examination, but desires to continue to operate under an owner-employer will, be a what under law: salesperson, sales agent, broker or realtor?

Except Devise A Life Estate is a freehold (ownership) interest that lasts as long as the grantee is alive. As long as the life tenant does not harm the property, they will enjoy the entire bundle of rights except for the right to leave the property in their will (to "devise" the property).

A life tenant enjoys the entire bundle of rights except for the right to: Mortgage Demise Transfer Devise

Conditional title A mortgage conveys conditional title to the lender (mortgagee) in order to secure repayment of the debt described in the note.

A mortgagee has which of the following: indefeasible estate, defeasible estate, conditional title, absolute title?

Blockbusting This is an example of blockbusting. Blockbusting is when an agent uses the perceived or prospective entry of a protected class into a neighborhood to scare homeowners into selling their homes (usually for the agent's personal financial gain).

A real estate agent mentions that a particular neighborhood has a lot of Argentinian immigrants moving in. This is an example of: panic selling, blockbusting, redlining, steering?

Capitalization Rate. The capitalization rate would be the most appropriate method here, since the property is an income producing building.

A real estate developer is considering purchasing a 6 story, 15 unit rental property. How should she determine the value of the property: sales comparison analysis, gross rent multiplier, capitalization rate or a cost analysis?

$480,000 sale price

A seller wishes to net $450,000 from a sale. They have closing costs of $1,200, and are paying a broker's commission of 6%. What price should they sell for?

This is an example of highest and best use (the idea that properties will be optimized to their most pro table use over time).

A small single family home located at 220 Willow Lane is knocked down, and replaced by a 35 room hotel. This is most likely an example of: Conformity GRM Optimization Assessment Highest and Best Use

1/3 Dower rights entitle a surviving spouse up to a 1/3 interest in their deceased spouse's real estate, in lieu of what was left to them in the will. (Abolished in MA though)

A spouse wants to sue for their dower rights. The deceased did not leave heirs. What are their dower rights: 1/2, 1/3, the entire estate, nothing?

A plat map or plat plan is used to describe the proposed or actual use of a subdivision. Plat maps use the lot and block method.

A subdivision is described with a(n): plat map, rectangular survey, metes and bounds survey, street and block map?

Liquidated damages Liquidated damages are damages that are pre-negotiated in a contract, and are paid out in the event of a breach (violation) of that contract.

A sum of money to be paid in the event of a breach of contract that is pre-agreed to in a contract is known as: damages, liquidated damages, estoppel, specific performance?

Net lease A net lease is a lease where the tenant pays some or all of the leased property's operating expenses (e.g., taxes, maintenance costs, management fees, etc.) on top of the rent, thus providing the landlord with net income.

A tenant paying some operating expenses is likely renting under a: gross lease, percentage lease, net lease, ground lease?

Easement in gross This is an example of an easement in gross (a right of way across a piece of land held by someone who does not own an adjoining lot of land). Corporations, like utility companies, are legal persons that can benefit from rights like easements.

A utility company has the right to run their gas lines through Maeve's property. Maeve's property is most likely subject to: - Easement in gross - Easement by prescription - Mineral rights - Betterment

Accretion is the gradual deposit of land by wind or water (e.g. sand washing up on a beach).

Accretion is best defined as which of the following: addition of land by wind/water, subtraction of land by wind/water, addition of land by wind or addition of land by water?

No, he's not 18 Massachusetts requires real estate licensees to be at least 18 years old.

Alejandro lives in New York, is 17. He wishes to be licensed as a real estate salesperson. May he be licensed: no because he is not 18, not because he does not live in MA, yes or yes with a parental waiver?

This place has a wheelchair ramp! It is never legal to advertise in a discriminatory way. In this case, you can never take part in the solicitation/exclusion of any person because of their protected class status, may not limit occupancy as to the number of children, and may never seek out a specific sex or gender. It is perfectly legal, however, to advertise that a house for rent has a wheelchair ramp.

All of the following ads would be illegal, EXCEPT for the ad that reads: - "Perfect for single women looking for safety." - "This place has a wheelchair ramp!" - "Because of the number of bedrooms, a maximum of one child is allowed in this unit" - "Spacious home including full living and dining rooms, with a bonus room ideal for a man cave."

Lease All of these agreements are subject to the Statute of Frauds, meaning they must be in writing to be legally enforceable, except for a lease. A verbal lease is legally enforceable, although it automatically defaults to a tenancy at will.

All of the following agreements must be in writing to be enforceable EXCEPT: A deed A marriage contract A P&S contract Lease

Appraised value of the property The financial details of the transaction must be reported to the IRS on a form 1099-S (the seller's name, their social security number, the sales price, etc.). The appraised value of the property does not need to be reported, since it does not impact the seller's tax liability.

All of the following details of a real estate sale must be reported to the IRS EXCEPT for: the sales price of the property, seller's name, seller's SS#, appraised value of the property?

The gradual deposit of detrital material by action of wind is know as alluvion is FALSE... Alluvion is the gradual deposit of land by action of water, not wind. All of the other statements are correct.

All of the following statements are true except: Fannie Mae was established in 1938 to introduce liquidity into the market Any verbal agreements to sell real estate is automatically an open listing The gradual deposit of detrital material by action of wind is know as alluvion The government's ability to take property for the public good is carried out by condemnation

Alluvium is sand, soil, or other detrital material deposited by water.

Alluvium is defined as: soil carried by water and deposited on another's land, muddy river banks, change in property from personal to real or a type of metal?

No Life estates are by definition uninheritable; they last only for the term of the grantee's life, and no longer.

Are life estates inheritable: yes, no, only life estates in reversion, not enough information to answer?

These sorts of problems seem tricky, but they can be approached the same way every time: always start with the value that has a ceiling. In this case, the agent cannot earn more than 1% on their first $5,000,000 in sales, so we calculate that first: $5,000,000 x 0.01 = $50,000. The agent earned $125,000, so we have not yet calculated for: $125,000 - $50,000 = $75,000 of commission. This amount is the commission on the remaining amount sold ($8,500,000 - $5,000,000 = $3,500,000), so the agents commission on the amount over $5,000,000 was: $75,000 / $3,500,000 = 0.02143, rounded up to 2.15%.

An agent is paid $125,000 this year. They are paid 1% on all property sales up to $5,000,000, and some percentage over that amount. They sold $8,500,000 in real estate this year. Their commission over $5,000,000 was:

$125,000 Cap rate is the percentage of the property value received as Net Operating Income (NOI) every year. This property has an NOI of $10,000, which the investor wants to be 8% of the property value, so the investor's offer would be for $10,000 / 0.08 = $125,000

An investor wishes to receive a cap rate of 8% on an investment property. He's interested in a building that gets an Net Operating Income of $10,000. How much should he offer to buy the building for?

Grantor An option is a type of contract between an owner and a potential buyer or lessee to buy or lease in the future at specified terms. The owner granting the option is the grantor or optionor; the person giving consideration is the optionee.

An option must be signed by the: grantee, agent, grantor, optionee?

Metes and bounds

An owner wishes to have a survey made of a commercially-zoned parcel. It is 150 feet on the front, 200 feet on the north side, 100 feet on the back and 77 feet on the south side. It is not in a subdivision. Which survey method would be most appropriate for the parcel: plat plan, links and rods, lots and blocks or metes and bounds?

Floating use period is also known as a Timeshare; it is a form of ownership where the owner only owns the property for specific period of time during the year in fee simple, along with a shared interest in the common areas.

An ownership interest that is based on a time interval is a: floating use period, interest for years, estate for years, non-freehold?

Disclosure An agent acting as a facilitator assists seller and buyer in reaching an agreement, but does not act as an official agent (sometimes they are referred to as non-agents). The facilitator must act honestly and accurately by disclosing known defects on the property, but has no duty of confidentiality unless agreed to by the parties.

As a facilitator you owe the buyer and seller: obedience, respect, confidentiality, disclosure?

The notice must be provided at the time of the first personal meeting for the purpose of discussing a specific property.

As a real estate agent, when must you provide a purchaser of real estate the agency disclosure statement: first meeting, first meeting to discuss a specific property, when submitting the offer, when signing the P&S?

Sudden loss of land by water Avulsion is the sudden removal of land from one property, and the addition of that land to another property, by the action of water. It sometimes happens to beachfront properties during storms.

Avulsion is the: slow loss of land by action of wind, slow loss of land by action of water, sudden loss of land by action of wind or sudden loss of land by action of water?

They may be anyone. If a sole proprietor (a broker working for themselves without a corporation) dies, the Board of Registration may issue a temporary broker's license to anyone named by a representative of the deceased. The temporary licensee does not need to have any real estate experience, or be related to the sole proprietor.

Broker Jim, a sole proprietor, dies. What is true about his replacement: they must be a broker, they can be anyone, they must have a real estate license or they must be related to Jim?

Let the buyer beware

Caveat emptor means: - Crave the empire - Let the buyer beware - Do not disclose private information - Agency

Unit fair market value Condominium fees are charged in proportion to unit fair market value.

Condominium fees are charged in proportion to: - Unit sq. footage - Unit fair market value - Unit location - Unit senority

The Sherman Anti-Trust Act prohibits contingent sales or "tying agreements," where the purchase of one item also requires the buyer to purchase another product or service from the seller.

Contingent sales (also known as "tying arrangements") are prohibited by: Sherman Anti-Trust Act 1890, Equal Credit Opportunity Act 1974, Fair Housing Act 1968 or Anti-Tying Act 1947?

Biennially Biennially means once every two years. Real estate licenses are renewed every two years in Massachusetts, and continuing education classes are required to renew a real estate license.

Continuing educated classes must be taken: biannually, biennially, yearly, every third birthday?

Shares in a cooperation In a cooperative, a corporation is formed for the limited purpose of providing housing to its owners. The people living in the building own shares in the corporation, which gives them a proprietary lease to their unit. They do not own their unit, only their shares in the corporation.

Cooperative owners own: a period of time, their unit and share of common areas, shares in a cooperation, their unit?

The FHA will often insure comparatively low loan amounts One of the primary disadvantages of FHA loans is that the FHA will only insure loans up to a certain amount based on the location of the home. This disqualifies many homebuyers from making use of FHA loans when buying a home.

FHA loans are beneficial for borrowers for all of the following reasons except: - FHA loans often have more lenient underwriting requirements - FHA loans are assumable with approval from the FHA - The FHA will often insure comparatively low loan amounts - Premiums for FHA loans are typically lower than comparable conventional loans

Inject liquidity into the credit market. Fannie Mae is a secondary market loan buyer. It is one of three major entities on the secondary mortgage market established by the US Government to encourage lenders to make borrower friendly loans, and to inject liquidity into the market, which making loans more readily available.

Fannie Mae was founded by the US Government to: insure lenders to increase home ownership, provide housing to vets, inject liquidity into the credit market, police lending practices?

Purchases loans Federal National Mortgage Association (Fannie Mae) was founded in 1938 and is one of 3 major entities on the secondary mortgage market that exists primarily to encourage lenders to make more borrower-friendly loans and inject liquidity into the market by purchasing loans from banks.

Fannie Mae: insures loans, gives loans, makes loans, purchases loans?

The Gross Rent Multiplier (GRM) is how many months of rent it takes for a property to pay for itself. To calculate the rent using the GRM, divide the property value by the GRM: $453,000 / 153 = $2,960.78 monthly rent

Franklin is looking to buy an investment property. He is seeking a GRM of 153. If a property is priced at $453,000 how much should the rent be to hit his target?

$269,500 The assessed value is the value subject to tax. To calculate Fred and Tina's assessed value, we must calculate 77% of their home's $350,000 market value: $350,000 x 0.77 = $269,500

Fred and Tina's home has a market value of $350,000. Their home is assessed at 77% of its market value. How much of their home value is subject to tax?

Yes, because Fred is not licensed. Massachusetts law outlaws the payment of referral fees to unlicensed persons. In this case, since Fred does not have a real estate license Tom should not be paying him a referral fee (the gift certificate), and has risked his license.

Fred, a stockbroker and good friend of Tom, refers a new real estate client to Tom. As thanks for the referral Tom gives Fred a $100 gift certificate to Fred's favorite restaurant. Has Tom risked his real estate license: yes b/c Fred isn't licensed, yes b/c he did not disclose this to his client, no or yes, because he did not tell his broker?

Yes Massachusetts law prohibits real estate agents and brokers from encouraging clients to break a real estate contract when it is for the agent's personal gain.

George and Betty are friends. Betty has accepted an offer on her home brought to her by Nick, a local broker and her listing agent. George recently became licensed and suggest to Betty that she break her contract with Nick, put the home back on the market, and list with him. Has George risked his license?

DBA Certificate Under Massachusetts law brokers operating under a trade name ("Grant's Homes" in this case) must file a Doing Business As (DBA) Certificate with the Board of Registration. That way the Board knows who is responsible for the trade name's real estate activities if they receive a complaint.

Grant, a broker and sole proprietor, wishes to advertise his brokerage as Grant's Homes. What must he file with the board to do this: articles of incorporation, nothing, written notice, DBA Certificate

$440,000 The LTV (Loan to Value ratio) of a real estate loan is based on the appraised value of the real estate. This means that the maximum the lender is willing to approve for the purchase of Tabatha's home ($396,000) is 90% of the home's appraised value. The appraised value of Tabatha's home is therefore: $396,000 / 0.9 = $440,000.

Gregory makes an offer to buy Tabatha's home for $450,000. Gregory's lender will lend up to a maximum LTV of 90%. The lender tells Gregory that this means that they will approve a loan for up to $396,000 for the purchase of Tabatha's home. What is the appraised value of Tabatha's home?

Deficiency judgment Harry Homeowner would be worried about the bank getting a deficiency judgment against him. A deficiency judgment would let the bank pursue Harry for the outstanding loan balance of $48,000 that was not recouped at auction.

Harry Homeowner can't pay his mortgage loan payments, and goes into foreclosure. He owes $346,000 to the bank. His home sells for $298,000 at foreclosure auction. He is at risk of the bank getting what against him: a secondary lien, a deficiency judgment, a lis pendens, a statutory claim?

Massachusetts brokers who accept out of state real estate development listings must inform the Board within 7 days of accepting the listing. Additional filing requirements exist for the owners/developers of such properties.

If a broker has accepted a listing located outside of the Commonwealth of Massachusetts they must: notify the clients in writing, disclose to the seller, notify the board within 7 days or do nothing out of the ordinary?

Balloon mortgages are loans where the amortization schedule (which determines the size of each payment) is longer than the payment schedule. This is therefore a balloon mortgage.

If a mortgage has an amortization schedule of 4 years and it has a payment schedule of 2 it is a: amortized mortgage, reverse annuity mortgage, adjustable rate mortgage, balloon mortgage?

Remainderman Life tenants cannot transfer their property by will, because their right to the property automatically terminates on death. The life tenant's lack of a will is therefore irrelevant; ownership will transfer to the remainderman.

If an owner of a life estate in remainder dies without a will, the estate will pass to: the grantor, the remainderman, state government, federal government?

Deferred 1031 exchanges defer, but do not eliminate, capital gains taxes. The taxes are still due payable if the exchanged property is ever sold and not replaced with an equally valuable property.

In a 1031 Exchange, taxes are: deferred, destroyed, displaced, disintermediated?

70 ft. In private versus public restrictions, the more restrictive rule controls, so you would be limited to 70 feet. In a subdivision, homeowners are bound to all of the covenants, as long as they are equally applied to all properties in the development. Your bundle of rights does not include an exemption from covenants.

In a subdivison with a restriction that limits driveways to 70 feet, but with public zoning regulations allowing for 80 feet, a homeowner would be limited to: 70 ft, 75 ft, 80 ft, or there is no such thing as a maximum driveway length, since it is assumed that the property owner has the full bundle of rights under fee simple absolute ownership.

Efficient and procuring cause means that it was the agent's effort that brought a ready, willing and able buyer.

In order to earn a commission a real estate agent must be what: licensed for 3 years, owner of the property, the efficient and procuring cause of the sale or the broker?

Efficient and procuring cause means that it was the agent's effort that brought a ready, willing and able buyer.

In order to earn a commission a real estate agent must be what: licensed for three years, owner of the property, the efficient and procuring cause of the sale, the broker?

An attachment is a legal seizure of property for use to satisfy a possible judgment. A lis pendens is the recorded notice of the attachment.

In real estate, the term "attachment" will refer to: - A trade fixture's status as property - The legal seizure of land - The addition of an improvement to land - An instrument recorded to inform the public that a property is subject to litigation

Forfeiture Forfeiture is the loss of money or anything of value, such as a deposit, due to failure to perform according to the terms of a contract.

In the event the buyer backs out of an accepted offer, which is most likely to occur: liquidated damages, forfeiture, specific performance, nothing?

Agency disclosures must include the agent's name, "license number", signature, and the date. They must be kept on file for 3 years after signing, and are subject to inspection by the Board.

Michael tenders his client with the mandatory real estate agency disclosure form on his first personal meeting with his client. Per Massachusetts law, Michael must: - Keep a copy of the document on file for 2 years - Explain the form to the client - Include his license number on the document - File a copy of the document with the Board of Registration within 7 days of signature

Consideration Consideration is something of value exchanged between parties of a contract (e.g., money, services, goods or promises).

Money paid to bind an "agreement-to-buy" is best defined as: surety, consideration, acknowledgement, common property?

The cost of the land Only improvements (structures built on the property) can be depreciated. Land value cannot be depreciated for tax purposes.

Nancy owns a small multifamily rental property. Which of the following is NOT subject to depreciation when she is preparing her taxes? - The cost of a recent roof replacement - The cost of purchasing the property - The cost of the land the property sits on - The cost of building an additional unit on the property

$250,000 Nick's commission is 2% of the sales price, so the sales price is $5,000 / 0.02 = $250,000.

Nick earns $5000 commission on a sale. He was paid 2% of the sale as his split. What was the sale price?

Easement by necessity A court may grant an easement by necessity if a property owner cannot legally access their property ("landlocked land") so that the owner may access their land.

Nick's property is surrounded on all sides by other properties. He might be granted what by a court of law: easement in gross, easement by prescription, easement by necessity, easement in common?

Mid-point Riparian rights are rights to a river adjoining a piece of property. They extend to the accretion line for navigable waterways (waterways accessible to boats), and extend to the mid-point for non-navigable waterways.

One's riparian rights in a non-navigable river extend: to the accretion line, to the mid-point, to the opposite bank, none of the above?

A devisee When Panine sold her interest to Penny it established a tenancy in common (the default form of co-ownership) between Penny and the other two surviving joint tenants. Patty and Pam would remain joint tenants, but Penny's interest is not part of the joint tenancy, since she did not acquire ownership at the same time as Patty and Pam (a requirement of joint tenancy). Therefore, Penny's interest is inheritable (co-tenants), and would be left to a devisee (heir receiving real estate) in her will.

Patty, Pam, and Panine, are joint tenants. Panine sells her interest to Penny. If Penny passes away, where would her interest go? - A devisee - Patty and Pam - Panine - A legatee

License A license is personal, revocable permission to enter someone else's property (e.g. a ticket to a sports game).

Personal, revocable, and non-assignable permission to enter someone else's property for a particular purpose is a(n): variance, easement, encroachment, license?

Increase in value from assemblage. Plottage is a principle stating that the whole is greater than the sum of its parts, and that property value can be increased by combining many small parcels of land (assemblage) into one large parcel.

Plottage is: combining parcels, selling plots in a subdivision, increase in value from assemblage or lot of plot value?

Yes, conflict of interest. The Board may suspend, revoke or refuse to renew a license due to broker having accepted, given or charged any undisclosed commission, rebate or profit on expenditures for a client (principal); it is a potential conflict of interest. Referral kickbacks not disclosed in advance to the client are not permitted. The gift that Randy received from the attorney is an example of a kickback that is outlawed under the Massachusetts licensing law.

Randy, a broker, is given a gift certificate to his favorite restaurant as thanks for sending his client to his friend, a real estate attorney, to deal with the purchase and sale agreement for the home his client was selling. Has he risked his license: no, no - since it's not cash, yes - since the client was not an attorney, yes - it is a potential conflict of interest?

Broker All payments made to real estate salespersons are paid by their employing broker; they are never paid by the principals directly.

Real estate salespersons who represent the buyer are paid their commission by: - Seller - Buyer - Broker - Negotiable

Truthfully inform "inquisitive" buyers about the seller's belief Paranormal activity is an example of a property stigma. Seller's agents should not a affirmatively disclose this information, but they must truthfully respond to any buyer questions about it.

Regina's client believes that the property they are selling is haunted by a specter. Regina must: - Verbally disclose the seller's belief to prospective buyers - Disclose the seller's belief in the listing description on MLS - Truthfully inform inquisitive buyers about the seller's belief - Keep the seller's belief confidential

All of the above Real estate agents must provide prospective renters with a notice that discloses whether the prospective tenant will pay a fee, the amount of the fee, its manner of payment, when the fee is due payable, and if a fee is due if a tenancy is not created (e.g. the tenant changes their mind about renting the apartment). The agent and tenant must sign and date the notice, the agent must put their licensed number on the notice, the tenant must be given a copy of the notice, and the agent's broker must keep a copy of the notice for three years.

Rental fee disclosure statements: whether a fee will be paid, agent signature, manner of payment, all of the above?

Chattel Chattel is an article of personal property; it is by definition moveable, except in the cases of trade fixtures and emblements. Rick's corn is an emblement (a annual or semi-annual crop), and is therefore treated as chattel despite being attached to the land.

Rick planted corn on his property. He is selling the land the corn was planted on. What sort of property are his plants: real, real estate, rooted, chattel?

Tenancy in Common In order to create a Joint Tenancy, all of the co-tenants must acquire ownership at the same time, and in the same deed. Since Fabius acquired his ownership share after Romulus, he would be a Tenant in Common with Romulus because Tenancy in Common is the default form of co-ownership.

Romulus, Remus, and Rhea own as joint tenants. Remus sells to Fabius. How do Romulus and Fabius own: tenants in common, joint tenants or tenants by entirety?

Yearly net income ($12,000 x 2) / $350,000 rental property price = 6.857% return on investment; rounded up to 6.86%.

Ronaldo is interested in purchasing a $350,000 rental property with a biannual NOI of $12,000. What would Ronaldo's ROI be?

$485,000 The market price is the actual price that a buyer paid for a piece of property. Thus, Rory's home has a market price of $485,000, since that is the price that Todd agreed to purchase her home for.

Rory lists her home for $489,000. She receives a purchase offer from Todd for $475,000. Rory counters his offer at $487,000. Eventually they agree on a price of $485,000. The market price of Rory's home is: $475,000, $485,000, $487,000, $489,000?

Yes, blind advertising Salespersons may not advertise under their own name only; this is known as blind advertising and is prohibited. Salespersons must include their broker affiliation.

Sally is a real estate salesperson. She advertises her client's home, but does not put her brokerage's name in the ad. Has she risked her license: yes - it is blind advertising, yes - she's selling without a broker, no - this is permissible, no - so long as she has her client's permission?

The first thing we need to know to solve this problem is how big an acre is: 43,560 square feet. We can use this to convert the acres to square feet by performing the following calculation: 43,560 x 15 = 653,400 square feet. Each lot Sara will build is 50 by 50 feet, so each lot is 50 x 50 = 2500 square feet. She can therefore build: 653,400 / 2500 = 261 lots.

Sara owns 15 acres of land. The township the land is located in requires a minimum lot size of 50 by 50 feet. What is the maximum number of lots Sara can make out of her property?

Void Offeror may withdraw their offer at any time prior to its acceptance, even if an expiration of the offer was specified.

Sarah makes an offer on Tuesday with an expiration date of Wednesday at 5PM. She withdraws the offer Tuesday night, citing a change in circumstances. The offer: is valid until Wed. at 5, is void, may be enforceable by a court of law, none of the above?

Section 8 is a federal program that provides renters with affordable housing through the use of vouchers that subsidize rentals from private landlords.

Section 8 is: a housing project program, type of subdivision plan, a housing voucher program, mortgage financing program?

Title V certification is required of septic systems. Title V requires that septic systems pass inspection within 2 years prior to sale (or 3 years if pumped annually), or 6 months after sale.

Septic systems must: be removed, receive Title V certification, receive 21E certification, be pumped annually?

$500,000 The first thing we need to know to solve this problem is how big an acre is: 43,560 square feet. We can use this to convert the acres to square feet by performing the following calculation: 43,560 x 3 = 130,680 square feet. Tammy has to set aside 50,000 sqft for roads, so she will have 130,680 - 50,000 = 80,680 buildable square feet of land. Each lot Tammy will build is 125 by 125 feet, so each lot is 125 x 125 = 15,625 square feet. She can therefore build: 80,680 / 15,625 = 5 lots x $100,000 = $500,000.

Tammy is looking to invest in property, and develop a number of lots sized 125' x 125', the minimum sized permitted by zoning. The site she is considering is 3 acres in size. Zoning will also require she set aside 50,000 square feet for access ways. If she sells each lot for $100,000 what will she make?

One year from the sale In Massachusetts, property owners have an equity right of redemption, or the right to pay their debt and regain ownership of their home, that extends one year from the date of sale at foreclosure.

Tax sales include a right of redemption for the foreclosed owner for: indefinitely, on a case by case basis, six months from the sale, one year from the sale?

11/1 and 5/1 Property taxes are payable on 8/1, 11/1, 2/1, and 5/1 in Massachusetts.

Taxes are payable quarterly in the state of Massachusetts on which dates: 8/1 and 4/1, 11/1 and 4/1, 4/1 and 7/1, 11/1 and 5/1?

Creditor shielding Tenancy by the entirety is a form of co-ownership permitted for married couples only. It is similar to a joint tenancy but also includes creditor protections, including a limitation on the forced sale of the property and an automatic homestead protection.

Tenancy by the Entirety is distinct in that it provides for: co-occupancy, sole possession and ownership, creditor shielding, inheritance?

The "boot" in a 1031 like kind exchange is "un-replaced property value". It is subject to capital gains tax.

The "boot" in a 1031 like kind exchange is: - The replacement property held in trust during the exchange - The deferred taxes from the sale of replaced property - Any un-replaced property value in an exchange - Any personal property converted to real property for the purpose of an exchange

The Board of Registration of Real Estate Brokers and Salespersons enforces license law in Massachusetts and was created in 1960.

The Board of Registration was established in: 1944, 1960, 1969, 1991?

Race The Civil Rights Act of 1866 prohibits discrimination on race in the purchase, sale, lease or conveyance of property without exception and is still deemed valid.

The Civil Rights Act of 1866 prohibits discrimination in housing based on: class, familial status, race, religion?

The Clean Water Act, or CWA, regulates the pollution of navigable waterways.

The Clean Water Act regulates: private waterways, navigable waterways, riparian waterways, accretive waterways?

The doctrine of laches provides that an unreasonable delay is asserting one's rights (such as in filing a lawsuit) causes the loss of such rights; the person is estopped from asserting/enforcing their rights.

The Doctrine of the Laches states that: real estate contracts must be in writing, leases run with the land, agency contracts need not be in writing, failure to assert a right within a reasonable time results in the loss of the right?

Trigger a due on sale clause because of death The Garn-St. Germain Act makes it unlawful to trigger a due on sale clause on death, devising of the property, leasing, marriage, divorce, or transfer to a family trust.

The Garn-St. Germain Act makes it unlawful to: mortgage property held in a family trust, trigger a due on sale clause because of death, mortgage a protected wetland, separate mineral rights from the mortgaged land?

Realty contracts be in writing The Statute of Frauds is the law about what contracts must be in writing to be legally enforceable. Real estate contracts are one of the types of contracts covered by the Statute of Frauds.

The Statute of Frauds requires that: agents disclose their name in advertising, bait and switch tactics be prohibited, listing contracts be in writing, realty contracts be in writing to be enforceable?

Ostensible This is an example of apparent or ostensible agency (agency or authority that appears to exist because of the situation, but does not legally exist).

The agency created when an agent appears to represent the buyer, even though they legally represent the seller, is: - Dual - Ostensible - Implied - Universal

The sale of a property subject to a mortgage The assumption (or due on sale) clause prevents assumption of the mortgage. Selling the property subject to an existing mortgage is one way that a loan can be assumed, and would thus be prevented by the assumption clause.

The assumption clause in a mortgage prevents: the sale of a property subject to a mortgage, the sale of the property with a purchase money mortgage, sale of the property as several separate parcels of land, leveraging of the property with a junior lien?

Broker bonds are made payable to the Commonwealth of Massachusetts, and can be cashed in by the State in the event that the broker mishandles client money.

The broker bond is made payable to: - Massachusetts - Party harmed by the broker - The broker - The agency corporation

Conditional use permit A conditional use permit allows a use that otherwise would not be permitted in the area under zoning laws, with the caveat that it is restricted to a specific use case deemed in the public interest. In this instance, the supermarket would likely receive a conditional use permit.

The citizens of a town, zoned exclusively residential, wish to bring a supermarket to the area. If approved the business will likely be issued: a variance, conditional use permit, nonconforming use, a business will not be permitted?

Habendum Clause (latin for "to have and to hold") transfers any limited estate being granted.

The clause in a deed stating that the grantors are conveying all interests and rights that they have and hold is the: covenant of seisin, covenant of warranty forever, restriction clause or habendum clause?

Cannot go back on a promise The doctrine of estoppel states that once you cause another to rely on your words, you cannot go back on your promises.

The doctrine of estoppel states that: you cannot go back on a promise when someone else relies on it, contracts are not binding unless signed in writing, you must do everything when you agree to it in a contract, you must enforce your right in a reasonable time or you lose them.

Closing Execution is the completion of a contract. Thus, a purchase and sale agreement, which is an agreement to sell real estate, is executed at closing (when real estate is sold). Don't confuse acceptance (agreement or signing) with execution (completion).

The execution of a purchase and sale contract occurs at: - Listing - Offer - Signing - Closing

Contract with a minor Voidable contracts may be voided by a court of law, but they may also be enforced by the party that was harmed by their creation (in this instance the minor child).

The following is a voidable contract: contract without offer/acceptance, contract with a minor, illegal contract or contract lacking consideration?

Chattel is personal property; it is moveable, and not attached to real estate. A dog leash is therefore an example of chattel.

The following is chattel: dog leash, above ground pool, garage, built-in bookcase?

A defeasance clause in a mortgage automatically relieve the collateral of the bank's claim when the loan is paid back - an important occurrence for the mortgagor (borrower).

The following is the most vital clause in the Mortgage lien for the Mortgagor: defeasance clause, acceleration clause, mortgage covenants, due-on-sale clause?

Bankruptcy The buyer and buyer's agent have a duty to disclose information about the buyer that will adversely impact the buyer's ability to purchase the property. Seller's agent would also have a duty to disclose such information known to them to their client.

The following must be disclosed affirmatively: the ghost haunts the house, new porch was put on the property, seller is moving to CA at the end of the month, buyer plans to file bankruptcy?

Acceleration The note contains the Acceleration Clause, which permits the lender to demand full payment immediately, in case of default. The note may also contain a Prepayment Penalty Clause which requires the borrower to pay a fee for prepayment of the loan. This clause is not common in residential loans, but more common in commercial loans, usually to guarantee the lender a certain amount of interest.

The following would be contained in the note when financing real estate: - Acceleration clause - Defeasance clause - Due on sale clause - Power of sale clause

Inverse condemnation Inverse condemnation is something that property owners can claim to receive compensation when an adjacent public land use lowers their property value.

The government begins uses a lot next to Morty Smith's home as a landfill. This causes Morty's property value to fall. What can he claim to receive compensation: eminent domain, escheat, inverse condemnation, doctrine of the laches?

A fee simple defeasible estate is ownership of real estate that can be lost. The violation of a deed restriction (which is a limitation on your property rights written into your deed) is one way that a property owner can lose ownership, meaning they have a fee simple defeasible estate under the deed restriction.

The grantee of a deed with restrictions receives what sort of estate: fee simple indefeasible, non-freehold, fee simple defeasible, leasehold?

Low humidity All of these would encourage the growth of mold except for low humidity (mold thrives in high, not low, humidity).

The growth of mold will be encouraged by all of the following EXCEPT: EIFS, a leaky foundation, poorly installed drainage, low humidity?

Fee simple indefeasible Fee simple indefeasible is the most complete form of ownership without limitations on rights of ownership aside from any public or private restrictions. A fee simple defeasible estate is qualified in some way, and may have certain limitations or conditions to title.

The highest form of ownership is: estate for years, pur autre vie, fee simple defeasible, fee simple indefeasible?

Personalty A key is an example of personalty (aka personal property or chattel) since it is not directly or indirectly attached to land.

The key to a storage locker located in the basement of a condominium building is: - Realty - Personalty - Trade Fixture - Emblement

$100,000 The maximum fine for a Federal fair housing law violation is $100,000 per offense.

The maximum fine for a violation of Federal fair housing law is: $5,000, $16,000, $50,000 or $100,000?

5 years The Board is made up of 5 members. Each member has a 5-year term, with one term expiring each year.

The members of the board of registration of brokers and salespersons have term limits of: 1 year, 2 years, 3 years, 5 years?

FOMC Through the Federal Open Market Committee (FOMC), the Federal Reserve Bank may buy or sell US Government securities held by member banks, which can impact the money available to banks and thus encourage or discourage lending.

The most common method used by the Federal Reserve Board to control the supply of money is: FOMC, UDAG, affirmative action, tandem markets?

Puffing Puffing is an overstatement of the quality of a good offered for sale. It can occur when a real estate agent gets too creative with their description of a listing, and is prohibited in most states.

The overstatement of the quality of a good offered for sale is: puffing, conversion, blind advertising, commingling?

An annually selected chairperson The Massachusetts Real Estate Board is made up of three real estate brokers with at least seven years of experience, and two unlicensed persons who represent the public. One of the members is appointed the chairperson. ALL members of the Board are "appointed by the governor" and have five year terms, including the chairperson.

The real estate board is made up of the following except: - Two lay people - Three brokers - An annually selected chairperson - Governor appointees

Governor appointees The Massachusetts Real Estate Board is made up of three real estate brokers with at least seven years of experience, and two unlicensed persons who represent the public. One of the members is appointed the chairperson. All members of the Board are appointed by the governor and have five year terms, including the chairperson.

The real estate board is made up of the following except: two lay people, three real estate brokers, an annually selected chairperson, governor appointees?

Loans The reserve requirement imposed by The Federal Reserve determines how much banks must maintain on hand as "cash" (reserves) against their deposits and other liabilities. The higher the reserve requirement, the less lenders can lend. This impacts the availability of loans.

The reserve requirement of the Federal Reserve influences the availability of: taxes, loans, listings, real estate agents?

$11,200 Since we already know the assessed value of the home, we can calculate the tax bill based on the rate of $50 per $1000 like so: $223,400 / $1,000 = 223.4 x $50 = $11,170 tax bill (rounded up to $11,200 in answer A, which they sometimes do on the real estate test - watch out for that!).

The tax rate in a town is $50 per $1000 of assessed value. How much would tax be on a home assessed at $223,400?

Conversion This is an example of conversion (the unauthorized use of client money). The use of any escrow monies to pay for commissions must be agreed to in writing by the buyer and seller.

The unauthorized use of escrow deposits to pay commissions is called: Commingling Conversion Computation Conscription

23,040 Townships under the government rectangular survey system are always 23,040 acres.

Township 3 South of Range 6 West would be how many acres? - 80 acres - 320 acres - 640 acres - 23,040 acres

Doctrine of Prior Appropriation Water rights (e.g. in a river) are determined by the Doctrine of Prior Appropriation in western states like California. Eastern states use riparianism.

Thomas owns property in California next to a non-navigable river. His rights in the river are likely determined by: riparianism, the doctrine of prior appropriation, adverse possession, hypothecation?

Both delivery of the deed by the grantor and acceptance by the grantee is required for title (ownership) to pass.

Title passes upon: signature of the offer, recordation of the deed, delivery and acceptance of the deed, acknowledgment?

Accepted Deeds are used to convey property. They must be delivered by the grantor, and accepted by the grantee, to convey title. They do not need to be recorded or witnessed, and merely writing a deed is not sufficient to transfer title to real estate without offer and acceptance (though it is required in addition to offer and acceptance, per the Statute of Frauds).

Title to real property passes to the grantee when the deed is: recorded, signed and witnessed, written, accepted?

Contract for Deed Contract for Deed (aka Installment Sales Contract) is a contract stating that buyer will make payments to seller until the property price is fully paid, at which time buyer will receive a deed transferring ownership to the property and acquire legal title. Until that time buyer holds equitable title.

Tom agrees to pay Jerry $5000 per month for 30 years, at the end of which he will take title to Jerry's property. Tom and Jerry's financing arrangement is a: mortgage, lease, contract for deed, purchase money mortgage?

Net Listing / Illegal This is an example of a net listing, which is illegal in Massachusetts. A net listing in a listing where the commission is not specified. Instead, the owner agrees to pay broker a commission equal to any excess above a fixed, specified sales price, below which the owner refuses to sell.

Tom hires Chad to sell his home. Tom tells Chad he wishes to sell for $150,000, and anything over that price Chad may keep as his commission. This agreement is: net listing/illegal, net listing/legal, fixed listing/legal or fixed listing/illegal?

Tom's total investment is his purchase price plus his renovations. We don't know what that total investment is, but we do now what he sold the property for ($303,000), and his return on his total investment (44% over his investment, or 144% total). We can therefore calculate his total investment as $303,000 / 1.44 = $210,416.67. This investment, less the costs of renovations, is his purchase price: $210,416.67 - $27,000 = $183,416.67 (rounded to $183,417 in the answer).

Tom purchases an investment property, puts work into it, and receives a return of 44% over his total investment. He did $27,000 in renovations on the property, and sold for $303,000. What was the purchase price?

Nothing. Tom doesn't have to do anything. Because it was legal to build his home when he built it, he will be grandfathered in under the new zoning rules as a "nonconforming use."

Tom's home is situated six feet from his property line. The town his home is located in enacts a new zoning ordinance requiring homes be built no closer than ten feet from the property lines. What must Tom do: purchase an extra 4 feet of land, move his home 4 feet back, sell his home to limit his liability under the new zoning ordinance, nothing?

23,040 A township is always 23,040 acres under the government rectangular survey system.

Township 1 North, Range 6 West of the Fourth Principal Meridian is how many acres? - 80 - 640 - 23,040 - 368,640

Equitable title Equitable title is a future right to acquire legal title (ownership) of real estate. Under an installment sales contract, the buyer has the right to acquire legal title if they make all of their payments under the contract. Hence, the buyer has equitable title to the property (the right to own the property in the future).

Under an installment sales contract the buyer is said to hold: legal title, fee simple ownership, equitable title, co-ownership?

Closing Statement Under the new TRID rules the HUD-1 was replaced by the Closing Statement, which must be provided at least 3 days before closing, and will lock in all of the loan terms on its delivery.

Under the Dodd Frank Act's new TRID rules, the HUD-1 was replaced with: the Good Faith Settlement Statement, Loan Estimate Form, Closing Statement, APR Disclosure?

Two investors purchasing jointly The four unities of time, interest, title, and possession are features of joint tenancy.

Unities of time, title, and interest, possession would necessary for: a single person purchasing a home, two friends purchasing a home in common, two investors purchase a property jointly, a tenant leasing for 12 months?

Bargain and sale A bargain and sale deed implies an interest or rights to convey property, but it does not warrant (promise) title to it.

What deed implies, but does not warrant, that the grantor holds title to the property being granted? - General warranty - Special warranty - Quitclaim - Bargain and sale

Changing depreciation. The Federal Reserve was established with the goal of maximizing employment, stabilizing prices, and moderating interest rates. Its powers and authorities have expanded over time, but the three most relevant relate to the discount rate, reserve requirement, and FOMC. Depreciation is a tax concern controlled by the IRS, not the Federal Reserve.

What is NOT available to the Federal Reserve System in controlling the money supply: FOMC, discount rate, changing the reserve requirement, changing depreciation?

A reciprocity agreement allows a state to recognize another state's license. This permits licensees to receive a license in another state without retaking the real estate classes, or test. Massachusetts has full reciprocity with a number of states: CT, RI, WV, NE, IA, TN, MI, CO, GA, PA, and NM.

What is reciprocity: co-broking, honoring the listing of another office, one state honoring the license of another, agency contract clause?

$3,000 $200,000 value x 0.5 assessed value = $100,000. $100,000 / $1000 = 100 payments, 100 payments x $30 per payment = $3,000 in total taxes

What is the annual property tax on a $200,000 home that is assessed at 50% of its value in a town with a millage rate of $30 per $1000?

Negative. Graduated Payment Mortgages are mortgages whose payments are adjusted down at the outset of the loan to make them affordable to the borrower. Typically, the initial payments on the loan are so low that they do not cover the interest on the loan. This results in negative amortization (the unpaid interest is rolled into the principal, growing the debt).

What sort of amortization does a graduated payment mortgage result in: positive, negative, graduated, ameliorative?

$250,000 When a single person sells their primary residence, their first $250,000 in profits are sheltered from taxes.

When a single person sells their primary residence, how much of their profits from the sale are sheltered from taxes per the Taxpayer Relief Act of 1997? - 100,000 - 250,000 - 500,000 - 1,000,000

All of the above Lenders generally look at three things when considering a borrower: their salary, credit history, and the value of the proposed collateral for the loan (usually a piece of real estate).

When considering a borrower, a lender considers: the property, their credit, their income, all of the above?

Accepted When you sign, the contract is accepted. During the term of the contract it is executory. When the contract is completed, it is executed.

When you signed a contract it is: - Valid - Accepted - Executed - Executory

Accretion line Littoral rights typically extend to the accretion line (which is the median high tide line, or the water's edge if the body of water is not tidal).

Where do littoral rights typically terminate? - Accretion line - Mid-point of the waterway - 100 feet from high tide mark - Middle tide line

Fiduciary Real estate agents (both brokers and salespersons) owe fiduciary obligations (obligations of trust) to their clients. Remember the acronym OLD CAR for the specific obligations.

Which best describes the relationship between broker and client: fiduciary, financial, customary, legal?

No children A deed restriction stating "no children" would violate the familial status protection in the Fair Housing Act Amendments of 1988, and would therefore be invalid.

Which deed restriction would be invalid: no children, residential properties only, owner must keep house painted blue, no pets?

Tax lien A cloud on title is a problem with the ownership of a piece of real estate. Tax liens give a town or city the right to sell the property for unpaid property taxes. This means that a homeowner could lose their ownership because of the property tax lien, which is a pretty big problem with ownership!

Which is a cloud on the title: emblements, tax lien, asbestos, closing costs?

Sand dunes Aeolian soil is soil transported by wind (e.g. sand dunes).

Which is an example of aeolian soil? Muddy riverbanks Farmland Sand dunes Grassy plains

Regulation Z is also known as the Truth in Lending Act; its purpose is to provide consumers with a full disclosure of the costs of credit by requiring the disclosure of APR (the Annual Percentage Rate) whenever specific loan terms are disclosed by a lender.

Which is correct about Regulation Z: published by the Federal National Mortgage Association, requires the disclosure of pertinent information such as down payment and annual percentage rate if a "triggering" item such as interest rate is advertised, requires disclosure of estimate of settlement costs by the lender, none of the above?

Right of survivorship Joint Tenancy is co-ownership that is de ned by a right of survivorship. Survivorship means that, if a co-owner dies, the surviving co-owners receive their ownership share. Because of this, ownership of property under a Joint Tenancy is not inheritable.

Which is the defining characteristic of Joint Tenancy? - Homestead protection - Right of survivorship - Limited time frame - Inheritability

Airtight rooms Mold is a type of environmental hazard. Conditions that contribute to mold growth include moisture and poor ventilation.

Which might promote the growth of mold: airtight rooms, sunlight, cold environments, steel beaming?

Foreclosure for unpaid taxes An involuntary alienation is an involuntary (done without the property owner's consent) loss of ownership. The correct answer is therefore the foreclosure, since it is an involuntary loss of ownership over a piece of property.

Which of the following constitutes an involuntary alienation? - Foreclosure for unpaid taxes - Mechanic's lien - Unpaid taxes - P&S contract

Incurable External obsolescence is a loss in value due to external ("economic") forces, such as neighborhood deterioration. It is incurable because the property owner cannot fix it.

Which of the following forms of depreciation is usually found in external obsolescence: inherent, absolute, incurable, curable?

Life estate in reversion For a life estate in reversion, on the grantee's death title passes back to the original grantor.

Which of the following forms of ownership a limited duration: estate for years, ownership in severalty, freehold estate?

Life estate in reversion, on the grantee's death title passes back to the original grantor. A fee simple is a defeasible estate because it may be lost if some condition is triggered.

Which of the following is a fee simple defeasible estate: ownership in severalty, life estate in reversion, tenancy at sufferance, condo owner?

Corn plants Emblements are annual or semi-annual crops that, despite their attachment to the land, are treated as personal property (or chattel) under the rules about property. Corn is an example of one such crop.

Which of the following qualify as chattel: light fixtures, corn plants, ceiling fan, pine trees?

Seller Typically the seller pays the broker's fee, and the buyer is paid with a split of the commission paid by the seller.

Which party typically pays the broker fee: buyer, seller, attorney, seller's broker?

Landlord with 2 single family rental properties Small landlords who own fewer than 3 single family homes are exempt from the Fair Housing Act and amendments. The other answers are examples of people covered by the Fair Housing Act: real estate agents are always covered, small apartment building are always covered, and discriminatory advertising is always covered by the Fair Housing Act even when the property owner is otherwise exempt.

Who would be exempt from the Fair Housing Act of 1968 and amendments: an agent renting a retirement community, seller of a small 5 unit apartment building, landlord with 2 single family rental properties, owner occupant advertising rental upstairs in 3 family home is for single people without children only?

Reverse Annuity Mortgages are mortgages for homeowners aged 62 or over. They permit these homeowners to receive payments against the value of their home. These payments are most often used to fund a portion of the homeowner's retirement.

Who would have a Reverse Annuity Mortgage: homeowner borrowing against their equity, homeowner with growing income, 62 year old homeowner, person renting to own?

Public good The right of governments to enact zoning ordinances stems from the government's police power. Police power is the right of governments to regulate private activity if it is in the public interest for them to do so.

Why may zoning ordinances be enacted: to raise revenue, for the public good, to restrict business activity, none of the above?

Submit the offer. All offers (and counteroffers), written, verbal, or otherwise, must be brought to the client. There are no exceptions to this rule.

You receive an offer to buy a condominium, but the offeror refuses to give a binder with the offer. You should: refuse to submit offer, submit the offer, submit the offer if the offeror will give consideration or submit the offer only if it is the best offer?

None Leases run with the land, which means that if the landlord sells the leased premises before the lease has ended the new owner is obligated to honor the lease.

You rent an apartment for two years. The landlord sells the building during the first year of the lease term. What effect does the sale have on the lease: none, lease may be cancelled, lease is cancelled, lease may be renegotiated?

Accretion line Property adjoining a navigable river has rights to the edge (the "accretion line") of the water.

Your ownership in a navigable waterway adjoining your property extends to: mid point, accretion line, low tide line, opposite bank?