REAL ESTATE PART 1

"Ad valorem" is Latin for

"According to value"

The monthly scheduled rent on a building is $3800.00. It went to an Act of Sale on the 15th of December. Prorating through the Act of Sale, how much was the credit to the buyer for rent if the seller only collected $3600.00 in December?

$1800.00

The taxes for the fiscal year beginning July 1, 2002, were $932 and have been paid by the owner of the property.The property was sold and the transaction was closed on April 15, 2003. Compute the tax proration using a calendar year and prorate "to" the day of closing. Who will be credited and what amount?

$196.62 credit to the seller

You are estimating the value of an apartment building. The monthly scheduled gross income is $4000. The annual operating expenses are $23,000. The rate of return a typical buyer expects is 8%. If the average vacancy rate is 5%, what would be your estimate of value?

$282,500

You sign an agreement to purchase a home. The contract requires that the seller replace the damaged living room carpet. The carpet you have chosen costs $16.95 per square yard plus $4.50 per square yard for installation. If the living room dimensions are 11' on the north wall, 10' on the west wall ( at a right angle to the north), and 14' on the south wall (at a right angle to the west), and the east wall at a slight diagonal, how much will the seller have to pay for the job?

$297.92

You receive a monthly salary of $600 plus 3.5 percent commission on all of your listings that sell and 2.5 percent on all of your sales. None of the listings that you took sold last month, but you received $8,460 in salary and commission. What was the value of the property you sold?

$314,400

A driveway is 10 feet wide and 150 feet 6 inches long. The cost to build it is $25 per square yard. What is the total cost of the driveway?

$4180.56

A home is listed for $200,000.00; it sells for 90% of the listed price, the assessment rate is 60%. If the property tax rate is 50 mills and was paid in advance, what is the proration if the sale occurs on March 1? Calculate to the Act of Sale using a Banker's year.

$4500.00 debit to buyer; $4500.00 credit to seller

The lender has approved the buyer for a loan with an LTV of 96.5% If the purchase price of the property is under contract at $150,000 what would the downpayment required of the buyer be in this case?

$5,250.00

A woman wants to know how much money she owes on her mortgage loan. She knows that the interest part of the last monthly payment was $647.91. If she was paying interest at the rate of 9 percent, what was the outstanding balance of her loan before that last payment was made?

$86,388.00

For Regulation Z to apply, a creditor is someone who extends consumer credit more than 25 times a year or more than _____ times a year if the transaction involves a residence as security.

5

Bob the broker has been contacted by a bank to provide a valuation estiamte on a home going into foreclosure. For an agreed upon fee, Bob prepares a valuation reports and submits it to be the bank representative. What would this report MOST likely be considered

A Broker Price Opinion (BPO)

Agent Stanley has a client that plans on staying in the same home for at least 20 years and the current interest rates are at relatively low levels. What type of loan would probably be recommended?

A fully amortized 30 term loan.

All of the following are considered agents EXCEPT

A personal assistant

A broker listed an owner's home for $85,900. One week later the broker presented the owner with an offer to purchase for $85,900, which met all the terms of the listing contract that the owner had signed. The owner thanked the broker but said that because of family problems, she no longer wished to sell her home and would not find any closing date acceptable. The owner told the broker that she would pay him $500 for his time and trouble. All of the following statements correctly describe the rights of the broker EXCEPT:

Because he did not get an acceptable offer, the broker is entitled to nothing.

If Bill wished to sell his golf clubs to John for use at his new golf course property, he should use what document?

Bill of Sale

A partial release clause is generally found in a:

Blanket mortgage

Broker A is involved in an exclusive right to sell listing with his seller client, Seller S. After receiving the property condition disclosure form from Seller S, Mark hosts an open house to promote his new listing. At the open house a customer expresses concerns about radon levels in the area. Seller S did not indicate a radon problem on the property disclosure. What is Broker A's best course of action in this situation?

Broker A should acknowledge the customer's concerns and inform the customer of their right to view the property disclosure form. Unless Broker A is personally aware of a radon problem specific to this property not disclosed by the seller, he should not disclose any further information to the customer.

Under which of the following conditions is a mutual release unfair to the agent?

Buyer finds a better property

As a licensed real estate salesperson, Mary works as a designated agent for her broker on a listing for Sally the seller. Mary also likes to work with buyers, and has several buyers currently working with her in addition to Sally's listing. One of Mary's buyers attends her open house for Sally seller's property and expresses interest in the home. The potential buyer asks Mary about the asking price and how much "room for negotiation" there is, and Mary tells her buyer client that the home is definitely overpriced. Choose the statement which BEST identifies this situation:

By showing the listed property to her buyer client, Mary is acting as an undisclosed dual agent since no disclosure form was used. Furthermore, she has breached her fiduciary duty to her seller by discussing the property's pricing with her buyer client.

Which of the following types of transactions would NOT be considered federally related under TRID guidelines?

Cash sales recorded on public record.

Joint Tenancy is a form of:

Co-Ownership

A man has his property listed with a broker. On June 23, a fire causes considerable damage to the property. On June 25, the owner revokes the listing. On June 29, the broker is deemed incompetent. Two days later, on July 1, the listing expires. On what date was the listing terminated?

June 23

Joe was showing a home built before 1978. He must provide the purchaser a disclosure regarding what environmental hazard before the purchaser enters into a purchase agreement?

Lead-based paint

According to RESPA and TILA regulations (TRID), at the time of loan application the lender must follow all of the following disclosure rules EXCEPT:

Lender must complete a HUD-1 Settlement Form and send to both borrower and settlement agent within 7 days.

The owner of an apartment building is best known as the:

Lessor

Under the new TILA-RESPA Integrated Disclosure Rule (TRID), what is the name of the required disclosure which must be sent to an applicant within 3 business days of making a loan application?

Loan Estimate Form.

Which of the following is NOT a test of a fixture?

Manner of Removal

Which of the following is NOT a test of a fixture

Manner of removal

Which of the following values is the most likely to set the residential price for a sale?

Market Value

What is a method of land description that identifies a parcel by its shape and boundaries?

Metes and Bounds

Which of the following is most likely to be considered an intermediary in a loan transaction?

Mortgage Broker

During a recent Board meeting, the Board's membership agreed that cutting commissions to gain market share would harm the industry as a whole and agreed to set certain limits on Board members and what they could charge for their services in the marketplace. Is this legal, and why?

No this is not legal and would be considered price-fixing which is an Anti-Trust violation.

Defects that an agent is required by law to correct include:

None of the above

A quitclaim deed provides which of the following warranties:

None of the above.

Defects that a seller is required by law to correct include:

None of the above.

If a building that is leased with 7 months remaining to the lease term is transferred to an heir because of the landlord's death, what is the effect on the lease?

None, the lease is binding on the heir

A buyer notices that the roof does not seem quite right and asks their agent if the roof leaks. The agent responds that upon asking the seller about the roof he was told that there is no seepage and no leaks. However, later it is discovered that there is a seepage problem with the roof. Which of the following best describes the agent's position in this situation?

Nothing was done improper in this situation

If a contract is replaced by a new agreement between the parties, essentially terminating the previous agreement, it is called:

Novation

Agent Sam has a purchase agreement to buy a house from Mr. Smith for $100,000. Agent Sam and Mr. Smith agree to new terms including a price of $102,000. and sign a new agreement to replace the old one. Then Agent Sam sells the right to buy the house for $102,000. to Mr. Jones who will go to the Act of Sale and actually buy it. What are two legal concepts that have occurred?

Novation and Assignment

While showing property to a prospective purchaser, an agent tells the purchaser that this is the nicest house in the neighborhood. After buying the house, another house in the neighborhood sells for more money and the buyers of the first house realize that the other house is a nicer house. In this situation, the agent is guilty of:

Puffing

The act of sale and the documents produced at the act of sale are based on which of the following ?

Purchase Agreement

A grantor wishes to convey title to a grantee in a deed that creates the least protection for the grantee. The grantor should give the grantee a:

Quitclaim deed.

Of the following liens, which generally would be given the highest priority in a debt collection procedure?

Unpaid property taxes

A drunken man signed an offer to purchase. The contract that he signed is:

Voidable

Agent Robinson has a seller that admits he is HIV positive. When listing the property, Agent Robinson should:

not disclose this information. Disclosure is illegal and not considered a material fact regarding the house.

Agent Branson wrote a new agreement between the buyer and seller because they both decided to agree to seller financing instead of the buyer getting a conventional mortgage. The new agreement cancels the original agreement by a legal process called:

novation.

The giver of an option is called the:

optionor

In selecting comparables for the Sales Comparison Approach, the appraiser selects from ___________________ the properties most similar to the subject property.

recent closed sales

When new land is acquired as water recedes it is called:

reliction.

The responsibilities of a real estate sales agent in a listing agency relationship include all of the following EXCEPT:

repair of defects.

An special assessment is confirmed after the agent got the listing. The assessment is to be paid in 5 equal installments including interest as researched by the agent. The agent is:

required to inform the buyer that there will be a special assessment lien at the transfer.

The listing broker owes fiduciary duty to the:

seller.

The Housing and Community Development Act, passed in 1974, provides that it is unlawful to discriminate on the basis of:

sex.

The seller asks listing Agent Johnson what disclosure is required for past termite infestation. There was no structural damage and the infestation was promptly treated. It occurred over 5 years ago. Agent Johnson should advise the seller that:

termite infestation should always be disclosed.

The valuation method that uses the monthly rent as the primary comparison to calculate market value is called

the GRM method.

The Principal of Substitution is most directly illustrated in the ______________________ to value by valuing a subject by comparing it to recently sold equivalent properties and the price they sold for.

the Sales Comparison Approach

A seller has slab problems which have resulted in cracked walls. The seller covers up the cracks and does not disclose to anyone that there is a problem. Under these conditions, which of the following is true?

the buyers can sue the seller for concealing the defect.

You are managing a property that has a one year written lease signed 3 months ago. The landlord dies. The new owner wants to manage the property himself when your management contract expires in one month. You should:

turn over the security deposit and the lease and tenant information to the new owner at the end of your contract.

John owns of a piece of property and wants to build a new structure within 15 feet of his property line, however local law requires a 20 foot setback for any improvements. He should apply to the local government for a:

variance.

An agent is told by the seller that the taxes are $1500 per year. The agent is asked by the buyer how much the taxes are on the property. The agent should

verify the tax figure for accuracy.

A contract with a mentally incompetent person is:

voidable

A broker has listed a home for sale. The broker will earn a commission:

when a "ready, willing and able buyer" signs an offer to purchase that meets the terms of the listing contract or terms acceptable to the seller.

A broker listed a home for sale under an exclusive-right-to-sell listing. A second broker cooperated with the listing broker and sold the home. The house was sold and the commission split between the listing broker and the selling broker. Which of the following is FALSE?

The selling broker gets the whole commission because he was the procuring cause.

In comparing an ARM and a GPM:

They both have lower payments in the early years, but the GPM has negative amortization.

At a local Board meeting, two brokers from different companies are discussing the concept of setting a commission rate for all participating members of the Board. Which statement best describes this situation?

This is illegal as it is considered price-fixing under Anti-Trust laws.

Several brokerage firms agree to not cross over into each other's territory and further agree to charge the same commission rate. Which of the following statements is true about this agreement?

This violates the Antitrust Laws

What is the purpose of the deposit in a real estate transaction?

To provide evidence of the buyer's intention to buy the property

When discussing the concept of total square footage with your client, what is the BEST way to describe how the total square footage is measured?

Total Area Under Roof (TAUR)

A broker that does not represent the seller or the buyer but simply is paid a fee to bring the two together is called a:

Transactional Broker

Regulation Z is a federal law regarding real estate financing which is contained within the text of which Federal Statute?

Truth in Lending Act

One of the best methods for an agent to use to avoid a discrimination lawsuit is to

keep detailed records of people you worked with and what properties they were shown

One who is too young to be held to a contract is most likely considered:

lacking legal capacity.

The lessee signs a six month written lease and pays the rent timely. The landlord sells the property just two months later. The new owner:

legally must honor the lease for the remainder of the term

Material defects:

must be disclosed if known by the agent.

Disclosing a suicide or murder that occurred on the property

not a material fact.

Agents must disclose

All of the above

Sellers are responsible for:

All of the above

Which of the following is a responsibility of the Agent to the Principal according to the Laws of Agency?

All of the above

Agents must disclose:

All of the above.

Material Facts include

All of the above.

Under the Law of Agency, the Principal owes the Agent:

All of the above.

A licensee sees a water stain on the second floor ceiling of a house he is about to list. What is the licensee required by law to do?

ask the seller about the stain

Property management duties include all of the following except

be an environmental expert

An agency is best described as when the:

broker represents the principal.

The broker has listed an owner's home. This agreement will be terminated by all of the following EXCEPT:

Death of the listing salesperson

A sale closed on July 21. Real estate taxes of $3,420 for the current year have not been paid. What is the settlement sheet entry for the proration of the real estate taxes?

Debit seller $1,909.50; credit buyer $1,909.50

Which is not a protected class under Fair Housing?

Dependence on public assistance

An appraiser uses the cost approach in appraising a home. The appraiser should NOT use which of the following types of information?

Depreciation on the land

If a landlock property owner fails to acquire a voluntary agreement to access his property from the nearest public road, he may get such access by an

Easement by necessity

Which of the following types of depreciation is generally incurable?

Economic obsolescence

A meat-packing plant has just been built one block from where your house is located. Strong odors emitted by the plant are lowering property values in your neighborhood. This loss in value would be classified as:

External Obsolescence.

A house located next to a relatively new airport would be an example of:

External obsolescence.

All of the following agencies are included in the secondary mortgage market EXCEPT the:

FHA

The relationship of trust and confidence that a broker has with a principal is called a(an):

Fiduciary relationship

An agent is trying to establish value for a residential rental home using sold rental comparables in the neighborhood. Which of the following is the most likely method used for the Income Approach to value?

Gross Rent Multiplier Method

Which of the following is true about an Exclusive Right to Sell Listing?

If someone else sells the property the Listing Broker still gets a commission

You are appraising a property in which seller motivation is a significant factor. The motivation would be most important in utilizing which of the following?

Sales comparison approach

Sam is a licensed agent who represents the seller of a home. Brian is a licensed agent who represents a buyer who wishes to purchase Sam's listing. After tough negotiations, the property is placed under contract and the typical purchase agreement inspection clauses are included. However, after the buyer has received the home inspection report, they inform Brian of their wish to back out of the purchase agreement. Which statement BEST describes this situation and the likely outcome?

Since the purchase agreement likely included an inspection clause for the buyer, after receiving the home inspection report the buyer has the right to rescind the contract and recover their initial deposit making the purchase agreement void.

Which of the following is an economic characteristic of land?

Situs

A buyer and a seller enter into a binding agreement to sell a house. The sellers then refuse to sell the house to the buyer because they decide they want to continue living there. Which of the following principles of law will be used to sue the seller?

Specific Performance

Which of the following grants zoning authority to municupal governments

State enabling acts

Broker X is showing buyer Y, an Asian, homes only in Asian neighborhoods. The broker may be guilty of

Steering

Bank A holds a lien on a home on which Bank B already had a lien. The lenders subsequently entered into an agreement in which Bank A moved into a first lien position. This is an example of a:

Subordination agreement

A buyer researches the neighborhood and purchases the property with the lowest asking price among several similar properties. This is an example of valuing using the Principle of:

Substitution

You signed a lease for one year and took possession of an apartment. When the lease expired, you continued to live in the apartment without the owner's consent. Your tenancy would be considered to be a(n)

Tenancy at sufferance

You signed a lease for one year and tookpossession of an an apartment. When the lease expired, you continued to live in the apartment without the owner's consent/ Your tenancy would be considered to be a(n)

Tenancy at sufferance

You and your spouse own your house in a form of ownership in which neither of you can sell the house individually. Your form of ownership is most likely:

Tenancy by entirety

You and your spouse own your house in a form of ownership in which neither of you can sell the house individually. Your form of ownership is mostly likely

Tenancy by entirety

In the practice of property management, which federal law specifically defines the amenities and other necessities which must be made available to handicapped persons for covered properties?

The Americans with Disabilities Act (ADA)

A Seller confides with their agent in a conversation that he is willing to take less for the property under certain conditions. Considering this information, what is the agent's best option moving forward?

The agent should advertise the property under the original terms of the listing contract

You have a Listing on a piece of property and you get a ready, willing and able purchaser to agree to a contract with the seller. Before the act of sale, the buyer and seller mutually agree to rescind the contract. Under these conditions, which of the following is true?

The broker will return the deposit to the buyer, unless the termination agreement says otherwise.

The zoning of a property with a gas station is subsequently changed to allow residential use only. Which of the following is true reguarding the future use of the gas station

The gas station may continue in its current use

The zoning of a property with a gas station is subsequently changed to allow residential use only. Which of the following is true regarding the future use of the gas station?

The gas station may continue in its current use.

Agent Smith showed a house to a buyer in a state that has designated agency. Agent Smith did not give the buyer the required agency disclosure form. Has Agent Smith created an agency relationship with the buyer?

Yes, showing the property created an implied agency, even if done illegally because she did not explain the disclosure.

You have just signed an option agreement that gives your friend the option to buy your house. Which of the following statements is not correct?

Your friend is obligated to buy your house.

An offer and acceptance must have:

a "meeting of the minds."

All of the following describe violations of antitrust laws EXCEPT:

a broker refuses to cooperate with a flat-fee broker.

Answering an offer by changing some of the terms and offering the new terms back to the original offeror is called:

a counter offer.

A broker listed a home under the condition that the owner receive $210,000 from the sale, with the broker being able to sell the property for as much as possible and to keep the difference as the commission. This agreement is an example of:

a net listing.

All of the following are considered agents EXCEPT:

a personal assistant working for a salesperson

The most important step for a property manager is

a property management agreement

Brokers get together and divide their market areas by region. This is:

a violation under Antitrust Laws.

To be considered an independent contractor by the IRS:

a written salesperson agreement is required.

A licensee working for a buyer notices that the floor slopes badly in one section of the house. The buyer's agent should

advise the buyer to get an expert to get an opinion as to the cause of the slope.

Which of the following terms are not discriminatory based on handicap?

all of the above

A contract in which both parties have fulfilled their promises is:

an executed contract.

A contract in which the intentions of the parties are shown by their conduct is:

an implied contract.

A property is for sale without air conditioning. A buyer wants to know if the value of the property will be increased if he installs air conditioning. He also wants to know if the sale is a good deal considering there is no air conditioning. The best way to establish the value of the home is to:

analyze the difference in sales prices of houses with air conditioning and without in this home's neighborhood.

A triangular parcel of land was 393 feet on the base and 600 feet along the side perpendicular to the base. How many acres of land did the parcel contain?

approximately 2.7 acres

An agent is to disregard instructions from a principal when those instructions:

are illegal.

An Express Agency:

can be oral or in writing.

The process of taking property while providing just compensation is called:

condemnation.

Which of the following is most likely to be a factor used in a Competitive Market Analysis?

date of sale

Agent Thurmond has a listing that is in a flood hazard area that floods often and has been deemed ineligible for flood insurance.That condition would make the property ineligible for typical federally-related first mortgage financing. Agent Thurmond is representing only the seller in this transaction. Agent Thurmond has received an offer from a potential buyer that plans to pay cash and would not be required to have flood insurance because he is not getting a mortgage. Agent Thurmond must:

disclose the material fact about the flood hazard to the buyer.

In a Fair Housing Complaint, an agent may be guilty of a violation if:

discrimination occurred, even if unintentional or unconcious.

After unsuccessful negotiations, Joe went to court to gain regular access to his property. The judge likely granted Joe a (an):

easement by necessity.

A man gave his best friend the right to go hunting on his farm. This would be an example of a (an):

easement in gross.

RESPA was designed to prevent abusive lending practices by

eliminating kickbacks

RESPA was designed to prevent abusive lending practices by:

eliminating kickbacks.

An oral offer is made to a tenant and the tenant orally accepts the offer to rent property. Which of the following best describes this transaction?

express contract

The relationship of the broker to the listing owner who hired him or her is best described using which term?

fiduciary

A salesperson received a sales deposit valued at $2,000. According to typical state rules regarding customer funds, the salesperson should:

give the earnest money to his broker for deposit in escrow.

Salesperson A for broker B has listed a home. Salesperson C for broker D is trying to sell the home to his own buyer. Salesperson C is a designated agent. Salesperson C is primarily responsible to:

his own buyer.

An agent lists a property for sale under an Exclusive Right to Sell listing. The agent finds a buyer who makes an offer that is accepted by seller. The agent gets the commission:

if his client then decides not to sell.

The current occupancy of the property by someone with HIV is:

illegal to disclose.

Real Estate as an investment has many advantages. One of the disadvantages most commonly found is

illiquidity

The term "mother-in-law suite"

is considered a common physical description

The existence of ghosts:

is not a material fact.

Injunctive relief:

is to prevent future discrimination.

When a signature is acknowledged:

it is legal evidence that the signature is voluntary and genuine.