RE Exam 5
A trade fixture: A. Can be affixed to real property without becoming a legal part of the property B. When affixed to a real property becomes an improvement C. Automatically conveys with real property when sold D. Cannot be removed
CORRECT ANSWER IS: A A trade fixture remains personal property and would only convey with the sale of the real property, if specified in the contract.
Which of the following would NOT have the right to file a mechanic's lien? A. An auto repair shop B. A concrete contractor C. A roofing contractor D. A lumberyard
CORRECT ANSWER IS: A Mechanic's liens apply only to real property. They include both materials supplied and/or labor provided for the improvement of real property.
What is the minimum age requirement for a real estate salesperson's license in New York? A. 18. B. 20. C. 21. D. 25.
CORRECT ANSWER IS: A The minimum age for a New York real estate salesperson's license is 18.
A loan which is not insured or guaranteed by any agency of the federal government is called a: A. Conforming loan. B. Nonconforming loan. C. Jumbo loan. D. Conventional loan.
CORRECT ANSWER IS: D A loan which is not insured nor guaranteed by any agency of the federal government is called a conventional loan.
What is subtracted from the net operating income to arrive at the before tax cash flow? A. The interest portion of the debt service. B. The principal portion of the debt service. C. The replacement reserves. D. The full debt service.
CORRECT ANSWER IS: D The full debt service (both principal and interest) would be subtracted from the net operating income to arrive at the before tax cash flow.
A purchaser agrees to buy a house for $47,000, obtaining a 90% loan. The buyer makes an earnest money deposit of $2,500. If attorney fees are $225, how much will the buyer need to bring to closing? A. $2,425. B. $4,700. C. $44,500. D. $47,000.
CORRECT ANSWER IS: A $47,000 x .90 = $42,300 loan amount; $47,000 - 42,300 = $ 4,700 down payment - $2,500 deposit = $2,200; Subtract the deposit because that has already been paid; $2,200 + $225 attorney fee = $2,425.
If an office space has 5,000 square feet of rentable space and a loss factor of 30%, what is the useable area of the space in square feet? A. 3,500 square feet. B. 3,000 square feet. C. 4,000 square feet. D. 1,500 square feet.
CORRECT ANSWER IS: A 5,000 square feet X 30% = 1,500 square feet lost; 5,000 square feet less 1,500 square feet = 3,500 square feet of useable space.
A 33-year old taxpayer who has never owned a home withdrew $10,000 from her Roth Individual Retirement Account to make a down payment on a personal residence. Which of the following statements is correct regarding this $10,000 withdrawal? A. The withdrawal is not taxable and there is no early withdrawal penalty. B. The withdrawal is not taxable but there is a early withdrawal penalty. C. The withdrawal is taxable and there is a early withdrawal penalty. D. The withdrawal is taxable but there is no early withdrawal penalty.
CORRECT ANSWER IS: A Holders of Roth IRAs may withdraw up to $10,000 to make the down payment on a "first home." There would be no early withdrawal penalty and since withdrawals from Roth IRAs are not taxable, the withdrawal would not be taxed either.
If a person who has the right to make a claim against another, but does NOT do so within a reasonable period of time, a court could determine that the person has lost their right to any claim. The denial of the claim is an application of the theory of: A. Laches B. Novation C. Rescission D. Reversion
CORRECT ANSWER IS: A If a person delays taking any action, and then later tries to take action that would be to the detriment of another person, the court would likely determine that such action is inequitable. Example: Assume that your neighbor builds a fence across your property line and you know it and do nothing about it. After the fence is finished and you sue the neighbor to have it moved, the court could find that you gave up your right by not acting sooner. This is the Doctrine of Laches.
In which of the following types of leases would one expect to find the least amount of services provided by the landlord? A. Loft leases. B. Percentage leases. C. Office leases. D. Gross leases.
CORRECT ANSWER IS: A Loft leases are for open space and the landlord rarely provides any services at all.
The New York Department of State would be likely to issue a "nonsolicitation order" as a result of: A. Blockbusting. B. Excessive and repeated solicitation by real estate licensees. C. Both blockbusting and excessive and repeated solicitation by real estate licensees. D. Neither blockbusting nor excessive and repeated solicitation by real estate licensees.
CORRECT ANSWER IS: A Nonsolicitation orders are issued because licensees have been engaging in blockbusting. Cease and desist zones are created as a result of excessive and repeated solicitations by real estate licensees.
A developer buys a parcel of land that adjoins his property. As a result, the land appreciates in value because the development will be more cost effective. The increased value of the property is referred to as the: A. Plottage increment B. Contingent increment C. Functional increment D. Economic increment
CORRECT ANSWER IS: A Plottage increment is the incremental increase in the value of land by assembling two or more parcels into one parcel.
Which of the following statements is true regarding rafters? A. They are used in the roof. B. They are horizontal support structures. C. They are vertical support structures. D. They are normally made of steel.
CORRECT ANSWER IS: A Rafters are used in the roof, and support the roof diagonally.
The rules which govern living in a condominium complex, such as hours of operation of the common areas and the like, are contained in the: A. CC&Rs. B. By-laws. C. Deed to each unit. D. House rules.
CORRECT ANSWER IS: A The Covenants, Conditions & Restrictions (CC&Rs) include the rules for living in the complex. (House rules serve the same purpose for cooperatives.)
Both federal law and Fannie Mae and Freddie Mac have provisions which allow borrowers to request cancellation of the Private Mortgage Insurance premiums under specified conditions. The Fannie Mae and Freddie Mac provisions differ from the federal law provisions in that the Fannie Mae and Freddie Mac provisions: A. Apply to the current market value, rather than the original purchase price; B. Apply at higher loan-to-value ratios; C. Apply at lower loan-to-value ratios; D. Forbid any charge for an appraisal.
CORRECT ANSWER IS: A The Fannie Mae and Freddie Mac guidelines allow borrowers to request cancellation of the PMI premiums once the loan-to-value ratio reaches 80% based on current market value, rather than original purchase price.
Many Korean families have purchased homes in an older neighborhood of your community. Most merchants in the area now cater to the Korean clientele. A Caucasian resident of the area has listed his house for sale with your firm. You list the property in the MLS. You also place a bi-lingual ad in the newspaper and a bi-lingual "For Sale" sign on the property. Are your actions discriminatory? A. No, this is proper marketing practice B. No, because you are targeting the market most likely to purchase the property C. Yes, because national origin is protected by the 1968 Fair Housing Law D. Yes, because bi-lingual ads are a form of steering
CORRECT ANSWER IS: A The actions of the broker in this situation do not constitute a violation of the law.
When the potential gross income is based on the actual rents generated through existing long-term leases, the appraiser is using the: A. Contract rent B. Market rent. C. Economic rent. D. Documented rent.
CORRECT ANSWER IS: A The contract rent is based on the actual rents being charged through long-term leases.
Which of the following statements is the best description of the difference between a project's contract rent and its economic rent? A. Contract rent is the actual rent; economic rent is the market rent. B. Contract rent is the market rent; economic rent is the actual rent. C. Contract rent considers only the rent payment; economic rent considers the rent payment plus the additional fees and income generated by the tenant. D. Contract rent considers the rent payment plus the additional fees and income generated by the tenant; economic rent considers only the rent payment.
CORRECT ANSWER IS: A The contract rent is the rent actually being paid by the current tenants. Economic rent is the market rate of rent that could be charged.
A tenant would expect to find the highest monthly rental or lease payment in a building classified according to BOMA standards as a: A. Class A building. B. Class B building. C. Class C building. D. Class D building.
CORRECT ANSWER IS: A The highest rent would be found in a class A building. (There is no class D building in the BOMA standards.)
The proprietary lease would specify each of the following issues, EXCEPT: A. The procedure for electing members of the board of directors of the corporation. B. The maximum number of occupants of the unit. C. The circumstances under which the unit can be sublet. D. A requirement for compliance with house rules.
CORRECT ANSWER IS: A The procedures for electing members of the board of directors would be found in the by-laws, not the proprietary lease.
Which of the following statements about radon is FALSE: A. Radon is particularly dangerous to children. B. Radon is colorless, odorless and tasteless. C. Radon is radioactive. D. Radon is the second leading cause of lung cancer in the U.S.
CORRECT ANSWER IS: A There is no evidence that radon is particularly dangerous to children.
If a principal allows a third party to believe that an agent has a given authority, the courts are likely to hold that the agent then has that authority. This is related to the principle of: A. Estoppel. B. Ratification. C. Implied agreement. D. Express agreement.
CORRECT ANSWER IS: A When a principal allows a third party to believe that an agent has a certain authority, the principle of estoppel holds that the agent then has that authority in fact.
An alienation clause is also referred to as a: A. Repatriation clause; B. Due on Sale clause; C. Prepayment penalty clause; D. Collateralization clause.
CORRECT ANSWER IS: B An alienation clause is a "Due on Sale" clause and means the loan must be paid off if the property is sold.
Exhaust ventilation systems would be LEAST appropriate for which type of climate: A. Cold climates. B. Hot and humid climates. C. Moderate climates. D. Climates with high temperature variations.
CORRECT ANSWER IS: B Exhaust ventilation systems cause a depressurization inside the structure. In hot and humid climates, this can cause moisture to get inside the walls and cause moisture damage.
Historic Preservation Commissions are concerned with what aspects of historic properties? A. Exclusively the exterior of the structures. B. Primarily the exterior of the structures, but sometimes the interiors as well. C. Primarily the interior of the structures, but sometimes the exteriors as well. D. Exclusively the interior of the structures.
CORRECT ANSWER IS: B Historic Preservation Commissions, or Landmark Commissions, are usually concerned with the exterior of the structures, but sometimes will consider interior features as well.
When the utility company brings electricity to a home, what is the difference between a service drop and a service lateral? A. The utility company is responsible for the interior wiring if there is a service lateral, but not with a service drop. B. If the power lines come from above, it is a service drop; if the lines are underground it is a service lateral. C. A service drop is leased while a service lateral is owned by the homeowner. D. A service drop connects to a fuse box while a service lateral connects to circuit breakers.
CORRECT ANSWER IS: B If the power lines come from above, it is a service drop; if the lines are underground it is a service lateral.
Larry the Liar made material misrepresentations on his application for property insurance. The insurance company did not discover the misrepresentations until the policy was already in place. Which of the following statements is correct: A. The company can only cancel the policy immediately if the policy is still within the "free look" period. B. The company could cancel the policy regardless of how long it has been in place. C. The company could refuse to renew the policy at its next anniversary date, but could not cancel the policy. D. The company could adjust the premiums to reflect the correct information, but could not cancel the policy for three years.
CORRECT ANSWER IS: B Misrepresentation is one of the justifications for cancelling a policy even after the 60-day free look period.
Which type of listing is illegal in the State of New York: A. An open listing. B. A net listing. C. An exclusive agency listing. D. An exclusive right to sell listing.
CORRECT ANSWER IS: B Net listings are illegal in New York.
Real estate brokers in New York are required to keep certain records regarding real estate transactions for at least: A. One year. B. Three years. C. Five years. D. Ten years.
CORRECT ANSWER IS: B New York law requires these records to be kept for three years.
The concept of opportunity costs is most closely related to: A. Legal fees. B. The time value of money. C. Interest rate risks. D. Poor investment strategies.
CORRECT ANSWER IS: B Opportunity cost is the income which could have been earned in a different investment when one chooses a particular investment choice. It is closely related to the concept of the time value of money. For instance, if a particular investment simply breaks even, the money could have been deposited in a bank and earned some interest, which means there was a lost opportunity.
The interest a unit-owner holds in a co-op is considered: A. Real property. B. Personal property only. C. Both real and personal property. D. Neither real nor personal property.
CORRECT ANSWER IS: B Owners of co-op units own share of stock in the corporation, which is personal property.
Which of the following licensees may originate mortgages on 1-4 unit residential properties in the State of New York: A. Real estate licensees only. B. Mortgage loan originator licensees only. C. Both real estate licensees and mortgage loan originator licensees. D. Neither real estate licensees nor mortgage loan originator licensees.
CORRECT ANSWER IS: B Real estate licensees can originate mortgage loans on any type of property other than 1-4 unit residential properties. Mortgage loan originators can originate loans on those properties.
Which of the following statements, relative to lien priority, is INCORRECT? A. A recorded deed has priority over a recorded mortgage B. Federal income tax liens have priority over all other liens C. The effective date of a mechanics lien is generally the date the work began or materials supplied D. The date of recording determines the priority for private liens
CORRECT ANSWER IS: B Real estate tax liens have priority over all others. Federal and State income tax liens must get in line just like the others. A deed MUST be recorded before property can be pledged.
A taxpayer owns four personal residences. Each home was purchased with an 80% LTV loan of $250,000. Assuming the taxpayer is married and files a joint return, the taxpayer could deduct the interest on how many of these homes? A. 1. B. 2. C. 3. D. 4.
CORRECT ANSWER IS: B Taxpayers can only deduct the interest on up to 2 homes, even if the total mortgage debt on all of the homes does not exceed $1,000,000.
The Civil Rights Act of 1866 prohibits discrimination on the basis of: A. Sex B. Race C. Religion D. Marital status
CORRECT ANSWER IS: B The Civil Rights Act of 1866 prohibits discrimination on the basis of race in all property, public and private. It was eventually upheld by the U.S. Supreme Court in the Jones v. Mayer Co. case in 1968.
The New York Environmental Conservation Law gives the State of New York the right to regulate wetlands which are at least: A. 1 hectare. B. 5 hectares. C. 7 hectares. D. 10 hectares.
CORRECT ANSWER IS: B The ECL gives the State of New York the power to regulate wetlands which are at least 5 hectares (about 12.4 acres).
An offer contains a contingency clause calling for a property inspection and approval by the buyer's wife within one week of the offer's acceptance. Is this a binding contingency? A. Yes, but only if the buyer's wife has signed the offer B. Yes, if the seller accepts the offer C. No, because only the buyer has made this offer D. No, because the law does not allow one spouse to make an offer on real property in the absence of the other
CORRECT ANSWER IS: B The contingency would be binding on the seller if the seller accepts the offer, thus making it a contract.
A buyer and seller entered into a valid contract. The buyer, for personal reasons, asked to be released from the contract. The buyer located someone else to buy the property. The seller entered into a new contract with the other person and released the first buyer from any obligation. This would be an example of: A. Assignment B. Novation C. Implied consent agreement D. Redemption
CORRECT ANSWER IS: B The difference between assignment and novation is that one party agrees to substitute another party and relieve the first party from liability. With an assignment the first party remains liable.
If Salesperson Steve works for Broker Betty and takes a listing on a property as seller's agent, which of the following statements is most accurate about the agency relationship created: A. Salesperson Steve is the agent of the seller while Broker Betty is the subagent of the seller. B. Salesperson Steve is the subagent of the seller while Broker Betty is the agent of the seller. C. Both Salesperson Steve and Broker Betty are agents of the seller. D. Neither Salesperson Steve nor Broker Betty are agents of the seller.
CORRECT ANSWER IS: B The listing contract is always between the broker and the seller, not the salesperson and the seller. Therefore, the broker is the agent of the seller and the salesperson is the subagent of the seller.
Under what circumstances would the original tenant who assigns the lease to another party be completely relieved of all liability: A. If the lease is assigned. B. If there is a novation of the lease contract, naming the new tenant as lessee. C. If the lease is sublet. D. Under any of these circumstances.
CORRECT ANSWER IS: B The original tenant would only be completely relieved of liability for the lease if there is a novation of the contract, either by replacing the current lessee with the new one or an entirely new lease.
The Real Estate Settlement Procedures Act (RESPA) requires lending institutions to provide Loan Estimate: A. When the loan application is submitted. B. Within 3 business days of loan application. C. Three days prior to closing. D. Within 10 days of loan application.
CORRECT ANSWER IS: B While in practice the good faith estimate is often presented when the application is completed, the law requires that it be issued within 3 business days of receipt of the application.
The board of directors of a cooperative project could reject a buyer's application to purchase shares for each of the following reasons, EXCEPT: A. The buyer's debt-to-income ratio was too high, although the lender approved it as having met Fannie Mae standards. B. The board felt that the buyer's personality was too abrasive, which would lead to arguments with other occupants. C. The buyer is a naturalized U.S. citizen who was born in Portugal. D. The buyer put up only a 20% down payment on the purchase.
CORRECT ANSWER IS: C Boards of directors can generally decline an application to purchase a unit for any reason or for no reason, except that they cannot violate fair housing laws. National origin is one of the protected classes under the fair housing laws, so the board of directors could not legally deny an application on the basis of the buyer's national origin.
If the owner of a commercial property is refinancing the property, what document(s) will be requested to verify the income the building generates? A. A certificate of lease from the tenants. B. A certificate of lease from the property owner. C. An estoppel certificate from the tenants. D. An estoppel certificate from the property owner.
CORRECT ANSWER IS: C Each of the tenants would be asked for an estoppel certificate, which will specify the remaining term, rent, security deposit and renewal options.
Which of the following statements is correct regarding the initial loan-to-value (LTV) ratios in commercial real estate as compared to initial LTV ratios for single-family residences? A. Commercial properties generally have a higher LTV than a residence. B. Both types of properties typically have the same LTV. C. Commercial properties typically have a lower LTV than a residence. D. Commercial properties do not have an LTV ratio.
CORRECT ANSWER IS: C Initial LTV ratios are usually lower than those for single-family residences. Initial commercial LTV ratios rarely exceed 70%, while residential LTVs often start at 80% and are often higher than that.
Xavier and Yasha own property jointly as tenants by the entireties. Which of the following is true? A. If Xavier dies, his or her interest will go to the party named in a will B. Yasha may mortgage his or her interest C. Xavier and Yasha are husband and wife D. Either Xavier or Yasha may sell their interest without permission of the other
CORRECT ANSWER IS: C Tenancy by the entireties can ONLY be held by husband and wife. Therefore C is the only true statement. Neither husband nor wife can encumber the property alone. Title passes automatically to the surviving spouse regardless of what a will might say.
If a husband and wife own property as tenants by the entireties, which of the following statements is true? A. Either husband or wife may dispose of their own interest, without approval of the other B. The wife of the husband may, alone, sell the property C. If either dies, the property by law passes to the surviving spouse D. None of the above statements are true
CORRECT ANSWER IS: C Tenants by the entireties is a form of tenancy with rights of survivorship. It is unlike other joint tenancy ownership in that both husband and wife must act together to either sell the property or encumber the property with debt.
A buyer signed a buyer´s listing calling for a 3% commission payment to the buyer´s agent. Using the services of that agent, the buyer purchased a home listed with another firm and that firm paid the buyer´s agent only 2.75% commission. Under current prevailing practices, which of the following statements is most correct: A. State law prohibits any further payment by the buyer beyond what is paid by the seller. B. The buyer would be liable for the remaining 0.25% commission and the law prohibits the buyer´s agent from waiving that fee. C. The buyer would be liable for the remaining 0.25% commission, but it is not uncommon for the buyer´s agent to waive that remaining amount. D. The buyer would be liable for a full payment of 3% of the purchase price.
CORRECT ANSWER IS: C The 2.75% commission paid by the seller would be credited against the 3% commission promised by the buyer. The buyer would be obligated for this amount, but it is common (although not universal) that the buyer's broker waives the remaining balance.
An area of the city is rezoned residential. Would this change threaten a bowling alley which was already in use on this area? A. Yes, the owners would have 30 days to move B. Yes, because the bowling alley does not qualify as residential C. No, because the bowling alley was already there when the zoning changed D. No, because the area residents would find it desirable to have this recreational facility easily available
CORRECT ANSWER IS: C The bowling alley is a non-conforming use. It was in the area before the zoning changed and it would be allowed to remain.
Which of the following would not be an aspect of the definition of the term "market value:" A. The most probable selling price. B. Purchase terms in cash or the equivalent of cash. C. The property is priced for a quick sale. D. Neither the buyer nor the seller are under undue pressure.
CORRECT ANSWER IS: C The definition of the term "market value" assumes "adequate exposure to the market," which would not be true of a property priced for a quick sale.
Which of the following clauses would prevent a mortgage from being assumed by a subsequent buyer? A. Condemnation clause; B. Defeasance clause; C. Due-on-sale clause; D. Right of first refusal clause.
CORRECT ANSWER IS: C The due-on-sale clause, legally referred to as the alienation clause, allows the lender to demand immediate payment of the entire debt if the title to the property is transferred (sold). This would prevent an assumption without lender approval.
The amount of commission or fee that a listing broker is to receive is determined by: A. The Multiple Listing Service. B. The National Association of REALTORS®. C. The seller and the broker. D. The Department of State.
CORRECT ANSWER IS: C The fee charged for an act of real estate brokerage is negotiated between the client and the broker.
Broker Janet assigns Salesperson Chris to work on a listing that started on January 3. The listing is a 90 day exclusive right-to-sell agreement. On March 1, Chris is killed in an automobile accident. What is the status of the listing agreement? A. The listing becomes an open listing. B. The listing terminates by operation of law. C. The listing remains valid. D. The seller may now list the property with another broker.
CORRECT ANSWER IS: C The listing agreement is a contract between the seller and the BROKER (Janet). Chris's death has no effect on the contract.
A tenant would expect to find the lowest monthly rental or lease payment in a building classified according to BOMA standards as a: A. Class A building. B. Class B building. C. Class C building. D. Class D building.
CORRECT ANSWER IS: C The lowest rent would be found in a class C building. (There is no class D building in the BOMA standards.)
The non-disturbance portion of the SNDA clause states: A. The lessees' interest in the property is secondary to the lender's interest, regardless of the sequence of recording. B. The landlord's ability to restrict an assignment of the lease. C. The lessee's rights to occupy the unit would not be lost due to a foreclosure. D. The lessee's rights to occupy the unit would not be lost due to a sale of the property.
CORRECT ANSWER IS: C The non-disturbance portion of the SNDA clause states that the lessee's rights to occupy the unit would not be lost due to a foreclosure.
On September 12, 2013 a residential property had the following liens filed against it: a 1st mortgage, a mechanic's lien and a special assessment. On May 20, 2014 a 2nd mechanic's lien was filed against the property. Which lien has priority? A. Mortgage B. 1st mechanic's lien C. Special assessment D. 2nd mechanic's lien
CORRECT ANSWER IS: C The special assessment would have priority over all the other liens. Special assessments are a form of real property tax and property taxes have priority over other liens.
Which of the following would you expect to be disclosed by a metes and bounds survey? A. Easements B. Depreciation C. Encroachments D. Marketability
CORRECT ANSWER IS: C The survey would reveal any encroachments. Easements, if underground, would not be obvious and would have to be checked in the county records. Once this is checked, they are indicated on the plat that the surveyor prepares. Depreciation is not something the surveyor considers, nor is the marketability of the property. He is concerned only with the physical characteristics of the property itself.
A broker takes a buyer´s listing. One of the clauses in the listing agreement requires the buyer to obtain the mortgage loan through a mortgage brokerage firm in which the broker has an interest. This is an example of: A. A strategic business alliance. B. A market allocation agreement. C. A tie-in arrangement. D. A group boycott.
CORRECT ANSWER IS: C This is an example of a tie-in arrangement, which is illegal under anti-trust laws.
If a broker has an exclusive right-to-sell listing, which of the following statements is INCORRECT? A. There must be a definite termination date in the listing. B. All money given, by the seller to the broker, must be accounted for. C. The broker may cancel the listing if he chooses. D. The broker is legally obligated to sell the property.
CORRECT ANSWER IS: D All exclusive listings must have definite termination dates. The broker (agent) is accountable to the seller (client) and also to the buyer for any monies received from either party. The broker is NOT obligated to sell the property. He is only obligated to make a reasonable effort to sell the property.
A real estate licensee who has a listing on a house and is acting as agent of the seller owes which of the following duties to that homeowner: A. Loyalty. B. Obedience. C. Duty to account. D. All of these choices.
CORRECT ANSWER IS: D All of these choices are part of the fiduciary obligation to the client.
A licensee and a homeowner make an oral agreement for the licensee to represent the homeowner in the sale of the home. This would be an example of: A. Estoppel. B. Ratification. C. Implied agreement. D. Express agreement.
CORRECT ANSWER IS: D An oral agreement is a type of express agreement.
In determining whether an advertisement is discriminatory, regulators might consider: A. Maps showing directions to the location. B. The types of advertising media used. C. The racial or ethnic characteristics of human models used in the advertisement; D. All of these choices.
CORRECT ANSWER IS: D Each of the listed choices would be considered in determining whether advertisements were discriminatory.
Under what circumstances can a New York real estate licensee receive compensation from both a buyer and a seller: A. Under no circumstances. B. Without restriction. C. Only in "in-house" sales, where the same firm represents both the buyer and the seller. D. Only with the consent of both parties.
CORRECT ANSWER IS: D Licensees can only receive compensation from both parties with the consent of both parties. It is always best to have that consent in writing. (While sometimes happens in an "in-house" sale, the law does not restrict it to in-house sales.)
What type of deed might be used in a foreclosure or bankruptcy: A. Patent deed. B. Administrator´s deed. C. Quitclaim deed. D. Referee´s deed.
CORRECT ANSWER IS: D Many states use a referee´s deed in a foreclosure or bankruptcy.
Under New York Law, which of the following statements about a deficiency judgment is correct? A. Deficiency judgments are not possible for residential property in New York; B. A deficiency judgment is possible unless the property is sold for more than 10% below its market value; C. A deficiency judgment is possible in any situation where a property is sold in a foreclosure for less than the balance due on the loan; D. A deficiency judgment is possible unless the market value of the property exceeds the amount due on the loan.
CORRECT ANSWER IS: D New York law generally permits deficiency judgments, except when the market value of the property exceeds the amount due on the mortgage loan.
An investor has experienced a net $50,000 capital loss. What is the maximum amount of this loss which can be deducted against ordinary income? A. $50,000. B. $25,000. C. $15,000. D. $3,000.
CORRECT ANSWER IS: D Only $3,000 of net capital losses can be deducted against ordinary income in any given year.
If a deed, transferring legal title from one party to another, is NOT recorded in the public records, which of the following statements is correct? A. The deed is valid B. The grantor gives up all rights to the property conveyed C. The transfer is binding on the parties to the deed D. All of the above
CORRECT ANSWER IS: D Recording the deed is NOT essential for the validity of a deed. It is the wise and prudent thing to do and most people do record the deed. The giving of a deed, although not recorded, is valid and binding on the parties and the grantor gives up his or her rights.
Which of the following statements is correct regarding assessment practices in the State of New York: A. Properties in New York are uniformly assessed at a full assessment level. B. Properties in New York are uniformly assessed at a fixed percentage of market value. C. The assessed value of properties in New York is determined by the State Government. D. There is no uniform practice of full or partial assessments in the State of New York.
CORRECT ANSWER IS: D Some areas in New York use full assessment, others use varying levels of partial assessment.
When setting equalization rates, the ORPTS will use its own data in the computation, rather than the assessing unit´s data, under what circumstances: A. In all circumstances. B. In no circumstances. C. If the assessing unit so requests. D. If the information provided by the assessing unit is not within specified error tolerances.
CORRECT ANSWER IS: D The ORPTS will use its own data in setting the equalization rate if the data provided by the assessing unit is not within specified error tolerances.
A home in Anytown, New York has an assessed value of $100,000. The City of Anytown has an equalization rate of 50%. Anytown Unified School District provides schools for Anytown and several nearby communities. When determining the property tax due for the school district, this home will have an assessed value of: A. $50,000. B. $100,000. C. $150,000. D. $200,000.
CORRECT ANSWER IS: D The assessed value for the school district will have to be equalized. If the equalization rate is 50%, the equalization factor will be 2 (1 ÷ 0.50). $100,000 X 2 = $200,000 equalized assessed value.
What type of interior wiring is sheathed in plastic and is moisture resistant and flame retardant: A. BX. B. Conduit. C. Greenfield. D. Romex.
CORRECT ANSWER IS: D The question describes Romex.
When the city wishes to take title to property for public improvements, title may be acquired from an unwilling owner through the right of: A. Adverse possession B. Police power C. Dedication D. Eminent domain
CORRECT ANSWER IS: D The right of eminent domain applies here. It is one of the four rights that the government withholds from private owners. The others are police power, taxation and escheat.
Which of the following factors will NOT affect capitalization rates? A. Interest rates. B. Risk factors. C. Liquidity factors. D. Vacancy rates.
CORRECT ANSWER IS: D Vacancy rates will affect the Net Operating Income (and therefore value), but will not affect the capitalization rate.
Which of the following expenses are considered fixed expenses when computing the net operating income? A. Property taxes only. B. Debt service payments and property taxes only. C. Debt service payments, property taxes and casualty insurance only. D. Property taxes and casualty insurance only.
CORRECT ANSWER IS: D When computing the NOI, only the property taxes and the casualty insurance are considered fixed costs. Debt service payments are not considered at all in computing the net operating income.
A lender guarantees that it will make a loan to an applicant when it issues: A. A prequalification; B. A preapproval; C. Either a prequalification or a preapproval; D. Neither a prequalification nor a preapproval.
CORRECT ANSWER IS: D While a preapproval is stronger than a prequalification, there are still contingency clauses dealing with market conditions and appraisals, so neither one would be considered a guarantee.
Under New York law and practice, the deductible for windstorm damage is typically: A. $5,000. B. 0.5% of the insured amount. C. $10,000. D. 1% to 5% of the insured amount.
CORRECT ANSWER IS: D Windstorm deductibles are typically 1% to 5% of the insured amount.