Test 12

Under the Fair Housing Act, which of the following is considered discriminatory?

"Catholics preferred."

An investment property returns 12% of its value, or $12,000 annually. What is the value of the property?

$174,000

If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5-1/2%, or a 20-year loan at 4-1/2%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION TABLE.)

$176,100

A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.)

$407

A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called

A contract.

If conditions for property use are included on a deed and these conditions are violated, what is the most sincere, potential penalty?

A court may order the return of the property to the original owner.

A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor?

A license

An agency relationship between a property owner and a property manager is usually created by

A management agreement

Which of the following statements best describes the risk taken by not recording a deed?

A subsequent purchaser's recorded deed could take precedence over any unrecorded instrument.

A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes

Agency coupled with an interest.

A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is

An agent to the broker and a sub agent to the principal.

A couple listed their home with a broker. After 2 months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. This listing was MOST likely

An exclusive agency listing.

What is a duration of a home warranty's coverage?

As disclosed in the contract that offers the warranty.

To be valid every deed must

Be executed by a grantor

Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE?

Both contracts are valid.

A formal appraisal will always be required when the

Buyer wants to obtain private mortgage insurance.

A broker and the buyers he represents are anxiously awaiting the closing on their new home. The closing is scheduled in 4 days. The buyers inform the broker that they just received revised Loan Estimate and Closing Disclosure forms from the lender, indicating the Annual Percentage Rate on their loan has increased by 0.3%. Based on the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this situation?

Confirm with the seller's broker, the lender and the closing entity that the closing must be delayed to allow for a new seven-day waiting period because of the interest rate revision.

The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should they give the prospective buyer?

Counteroffer.

An exception to title insurance coverage is

Defects that clearly appear in the title search.

An equal housing opportunity notice MUST be

Displayed in a brokerage office.

When the sellers are lending part of the purchase price, they may secure the debt either with a deed of trust or a mortgage. For the seller, one benefit of the deed of trust is that

Foreclosure is usually simpler and faster

When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should

Have short deadlines.

A lender will make an 80% loan-to-value loan on a property that is appraised for $72,250 and sells for $73,500. If the buyer has saved $14,450 for a down payment, how much more (if any) will he need in order to make the down payment required under the terms of this loan?

He needs an additional $1,250 in order to make the down payment.

Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond?

If you feel it is in your best interest, please feel free to do so.

Earnest money should be deposited into a trust account

In a timely manner, according to state laws.

Under the common law of agency, licenses owe the broker with whom they are associated all of the following duties except

Indemnification

Even with title insurance, the policyholder may still suffer losses arising from

Land use change due to zoning ordinances.

Failure of a real estate agent to comply with Fair Housing practices is punishable by

License revocation and criminal prosecution.

A licensee has entered into a dual agency agreement. In this situation, it is critical that all parties understand that it is impossible for the licensee to fully perform for either party the traditional common- law agency duty of

Loyalty.

Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of

Misrepresentation.

A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city that they would like to live in. What type of lease would best suit the couple's needs?

Month- to-month

In helping a buyer select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage broker, for all of the following except

More variety of loan programs available.

What critical aspect of the property inspection process MUST licensees convey to prospective buyers?

Need for inspections to be completed within the time stated in the contract.

A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not?

No because I is appropriate to show any property for which the buyer is qualified.

A gross lease can be best defined as one where the tenant pays, as a part of the rent,

No operating expenses of the leased space.

According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the

Prepayment penalties and rebates

The Civil Rights Act of 1866 prohibits any type of discrimination based on

Race.

Antitrust laws prohibit competing brokers from all of the following EXCEPT

Receiving compensation from both the buyer and the seller.

The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous level of lead. Because of this, some Federal agencies, such as FHA

Require the buyer to acknowledge disclosure of the presence of any known lead paint.

An example of a contract terminated due to inability to perform would be one in which the

Seller had contracted for sale of the entire property without the knowledge or consent of the other tenant.

When a principal authorizes an agent to perform a particular act or transaction, it is an example of

Special agency

In the sale of a property, there is often confusion over whether an item is a fixture or personal property. What is the best way to avoid this controversy?

Specify questionable items of property in the written sales contract.

A minority couple come to an agent looking for a house. The agent knows of properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the agent takes them to only properties in low-priced and integrated neighborhoods. This practice is known as:

Steering

A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should

Tell the seller that the buyer will pay more.

A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should

Tell the seller to disclose the termite treatment on the property disclosure.

A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have?

Tenancy at will.

While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement may be unenforceable because

The agreement does not comply with the Statute of Frauds.

During the listing presentation, the seller questions the amount of commission to be paid and is told

The amount of commission is negotiable.

A realty firm has just entered into an agreement a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has a relationship with

The builder

Alex, 14, and Kent, 17, inherited a piece of property. The next year, Kent deeded the whole property to Alex, who immediately put it on the market. An adult buyer made a written offer which was accepted by Alex. Which of the following is TRUE?

The buyer can not legally compel Alex to sell.

A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have?

The buyer may sue the seller for specific performance.

A seller's statement in a property disclosure document means

The owner is disclosing known latent defects.

A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if

The owner withdraws the offer before it is accepted.

A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so?

The person appointed by the court to act for the disabled person must contract on his or her behalf.

MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and

The sale price

A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a foreclosure auction to a speculating investor for $88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is false regarding the distribution of funds?

The second mortgage receives nothing unless he forced the foreclosure auction.

A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable?

The seller is heavily under the influence of alcohol at the time of the signing.

A contract for the sale of a home has been signed by both parties. This contract will remain executors until

The transaction has closed.

A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that

There is no dollar limit on damages paid.

If the terms of a contract indicate that Party A will be obliged to perform her part of the contract only if Party B chooses to take a certain action, then the contract is a

Unilateral contract on which only Party A has made a promise to perform.

A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as

Void.

Although states make specific laws governing water rights and the the right in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian or littoral rights are automatically conveyed with the property, or all water rights are controlled by the state under the doctrine of prior appropriation. The doctrine of prior appropriation is most likely to be followed in states where

Water is plentiful