Texas Real Estate Principle 2 (TrainAgentsOnline)
According to federal law, a property built prior to which year requires a mandated disclosure and information on the hazard of lead based paint by given to buyers and tenants? A) 1978 B) 1987 C) 1980 D) 1984
A) 1978
What is the required down payment with a FHA loan on a property with a value of $100,000? A) 3.5% B) 1.75% C) 10% D) None of the above
A) 3.5%
What is the expense-to-income ratio limit required for a FHA loan? A) 31% B) 43% C) 25% D) 15%
A) 31%
What is an abstract of title? A) A brief history of the title to a parcel of real estate describing its ownership history and all past and present encumbrance B) A brief document listing only a property's previous owners C) A formal document reflecting an attorney's opinion about whom, if anyone, may properly claim ownership of a property D) A brief summary describing where interested parties can find the public records related to a property
A) A brief history of the title to a parcel of real estate describing its ownership history and all past and present encumbrance
Which of the following statement is TRUE about the disclosure of environmental risks? A) A landowner's ignorance of a environmental problem does not relieve him or her of liability B) A landowner is not liable if he or she was not aware of an environmental problem C) A landowner is not liable if he or she had no role in creating the contamination D) A landowner is never liable for environmental problem on his or her property
A) A landowner's ignorance of a environmental problem does not relieve him or her of liability
Which one of the following statements correctly defines the term "loan origination fee"? A) A one-time fee charge by the lender for making the loan B) A charged by the lender based on the location where the loan originated C) A one-time fee charge by the lender for opening a escrow account D) A one-time fee to a credit report service for sending a credit history to the lender
A) A one-time fee charge by the lender for making the loan
What is the down payment for a VA loan? A) Any part of the sale price that exceeds the home's appraised worth B) 0 C) 10% D) 3.5%
A) Any part of the sale price that exceeds the home's appraised worth
An appraiser's compensation can have all of the following characteristics EXCEPT be __________________ A) Based on the appraised value B) Set prior to completing an assignment C) Based on the complexity of the appraisal task D) Paid directly by a seller or buyer
A) Based on the appraised value
What is the first step in calculating a cash flow? A) Before tax cash flows B) Annual operating expenses C) Depreciation write-off D) After cash flow
A) Before tax cash flows
Which land use control regulations materials and safety? A) Building Code B) Zoning C) Deed restrictions D) Fair housing laws
A) Building Code
What is the best method used by investors or real estate professionals in determining value and return on the investment? A) CAP rate B) Price Per Square Foot C) Equity Dividend Rate D) Debt Coverage Ratios
A) CAP rate
Which of the following is subtracted from net income of a borrower? A) Car payment & loss on rental property B) Alimony and/or child support C) Part-time income D) Retirement benefits
A) Car payment & loss on rental property
What is the possible sign of wetlands? A) Cattails B) Ferns C) Tall grasses D) Pine trees
A) Cattails
If zoning officials do not want to grant a variance, what may be done to allow a varying use of the property with specific restrictions to that owner's use? A) Conditional use permit B) Industrial zoning C) Residential zoning D) Commercial exemption
A) Conditional use permit
Which covenant provides the grantor's guarantee that he or she owns a property and has the legal right to transfer its title? A) Covenant of seisin B) Covenant of quiet enjoyment C) Covenant against encumbrances D) Covenant for further assurances
A) Covenant of seisin
What most people commonly refer to as a mortgage loan includes which of the following documents? A) Deed of trust and a promissory note B) Appraisal and home inspection C) Mortgage and sales contract D) Deed and title
A) Deed of trust and a promissory note
Which of the following statements about local property laws is TRUE? A) Deeds can limit land usage B) Local property laws need not conform to federal fair housing legislation C) Deed restrictions are dependent on municipal codes D) Ownership right cannot be lost unless willingly conveyed
A) Deeds can limit land usage
How can fractions can be converted to equivalent decimals? A) Divided the numerator by the denominator B) Divide the denominator by the numerator C) Add the denominator and the numerator D) Subtract the denominator from the numerator
A) Divided the numerator by the denominator
Which of the following is not correct for a marketable title? A) Does not allow the recipient of the title to exercise ownership rights without having to defend those rights through litigation B) Shows that the property can be sold or mortgaged at fair market value by a practical and knowledgeable individual C) Does not have any defects that have been openly accepted by the buyer D) Does not have any Liens or encumbrances that have not been openly excepted by the buyer
A) Does not allow the recipient of the title to exercise ownership rights without having to defend those rights through litigation
What is net operating income? A) Effective gross income minus operating expenses for the year B) Potential gross income minus operating expenses for the year C) Effective gross income D) Potential gross income
A) Effective gross income minus operating expenses for the year
The National Environmental Policy Act requires which of the following thing for Federally-Funded projects? A) Environmental impact statements (EIS) B) Violator funded clean up C) Home inspections D) Sharing of surface waters
A) Environmental impact statements (EIS)
Which documents will likely be required by a lender prior settlement of closing A) Fire and hazard insurance policies B) A property's deed C) Record of first and last loan payment D) None of the above
A) Fire and hazard insurance policies
What is eminent domain? A) Government's right to take privately held land for the benefit of the public B) The voluntary transfer of private land to the public C) A right to use the land of another D) The right to physically take ownership in another's property
A) Government's right to take privately held land for the benefit of the public
For transactions that fall under RESPA guidelines, What must be used to account for expenses at closing? A) HUD-1 Settlement Statement B) Form 1099-S C) FIRPTA Form D) Closing checklist
A) HUD-1 Settlement Statement
What is the greatest disadvantage of real estate investments? A) It may take months to liquidate B) There is too many obligations as compared with other industries C) Real estate is generally an unpredictable market everywhere D) The investment required is too much compared with the return on it
A) It may take months to liquidate
The agreement under which a tenant hires a property from a landlord is a: A) Lease B) Contract C) Agreement D) Estate at will
A) Lease
What does "LTV" stands for? A) Loan-to-value ratio B) Limit to value (of a loan) C) Loan-team value D) Long-term variability
A) Loan-to-value ratio
What is the most important thing a property manager can do to increase property owner's profits? A) Maximizing occupancy B) Creating advertising designs C) Maintaining property D) Evicting tenants
A) Maximizing occupancy
Which zoning action grandfathers a current use? A) Non-conforming use B) Variance C) Conditional-use permit D) Setback
A) Non-conforming use
What does "P.O.C." mean on a Closing Disclosure from line? A) Paid outside of closing B) Paid over the cost C) Proven outside of closing D) Provided outside of closing
A) Paid outside of closing
According to the legal doctrine of escheat, what happens to the estate of a person who dies without a will and no legal heirs? A) Passes to the state B) Sold at a public auction C) Descends to a named beneficiary of the decedent D) Used for governmental purposes
A) Passes to the state
How do you calculate the annual interest payment on a loan? A) Principal x Annual interest rate (a percentage) x Time B) Principal x Annual interest rate (a percentage) x 12 C) Principal x Annual interest rate (a percentage) divided by Time D) Principal x Annual interest rate (a percentage)
A) Principal x Annual interest rate (a percentage) x Time
What are brownfields? A) Properties that cannot be used due to environmental contamination or hazards B) Foreclosed properties that are owned by lenders but not used C) Undesirable properties located in areas zoned for industrial use D) Unused raw land owned by the city, country, or state
A) Properties that cannot be used due to environmental contamination or hazards
A total debt service ratio is used in which of the following tasks? A) Qualifying loan application B) Adjusting loan interest rates C) Qualifying the property for the loan D) Reducing the lending rate
A) Qualifying loan application
What is the primary advantage of a conventional fixed rate mortgage? A) Stable monthly payments B) Very low starting interest rate C) No down payment D) Easy to take advantage of a drop in interest
A) Stable monthly payments
What is the only depreciation method that can be applied to real estate investments? A) Straight-line B) Unit-of-production C) House-of-service D) Sum-of-year
A) Straight-line
The Clean Water Act (CWA) is focused on________________. A) Surface waters B) Groundwater C) Water usage D) Brownfields
A) Surface waters
Which type of leasehold estate or tenancy is NOT a lease agreement? A) Tenancy at sufferance B) Estate for years C) Periodic estate D) Estate at will
A) Tenancy at sufferance
Why do the conforming guidelines for conventional loans become stricter as loan to value (LTV) increase? A) The borrower has less equity in the property and is more likely to default B) The borrower has more equity in the property and is more likely to default C) The borrower has more equity in the property and is less likely to default D) the borrower is less equity in the property and is less likely to default
A) The borrower has less equity in the property and is more likely to default
To turn a fraction into a decimal, you would divide numerator by? A) The denominator B) 2 C) 0 D) Itself
A) The denominator
In Texas, Who is considered the owner of the property on the date of closing? A) The seller B) The Buyer C) The escrow agent or title company D) The trustee
A) The seller
When does a cloud on a title occur? A) There is a real or potential flaw in a title B) There is a known encumbrance accepted as part of the conveyance process? C) All past owners have been identified D) There are no other claims to the property
A) There is a real or potential flaw in a title
Which type of property is part of the resort and recreational property market? A) Timeshares B) Farm C) Office space D) REO property
A) Timeshares
A habendum clause usually starts with the phrase: A) To have and to hold B) Until the obligations of C) However, must include D) This includes
A) To have and to hold
How do you convert a percentage to a decimal? A) Two places to the left and remove the percent sign B) Two places to the right and remove the percent sign C) Three places to the left and remove the percent sign D) One place to the left and remove the percent sign
A) Two places to the left and remove the percent sign
Why was environmental legislation passed to protect wetlands? A) Wetlands have many beneficial effect on the ecosystem B) Wetlands are in high demand for development C) Wetlands have many conditional that are hazardous for humans D) Wetlands are like rural brownfields
A) Wetlands have many beneficial effect on the ecosystem
When an investor decides to make an offer there are key factors to consider that help determine a price to offer. what is the rule of thumb for estimating market value of income-producing residential property? A) Gross Rent Multiplier B) Capitalization C) Effective Gross Income D) Recapture rate
A)Gross Rent Multiplier (GRM)
How many square inches of area is equal to 1 square foot? A) 140 square inches = 1 square foot B) 144 square inches = 1 square foot C) 145 square inches = 1 square foot D) 142 square inches = 1 square foot
B) 144 square inches = 1 square foot
How many types of leasehold estates are there? A) 6 B) 4 C) 3 D) 2
B) 4 1. Estate for Years 2. Periodic estate 3. Estate at will 4. Tenancy at sufferance
Among the following individuals and entities, which one MAY NOT preside over the closing process in an escrow closing? A) A representative of a bank's escrow department B) A buyer's broker C) A title company D) A trust company
B) A buyer's broker
Who is the most likely succeed and prosper in property management? A) A real estate professional with license B) A highly detailed orientated manager who documents everything C) A tech savvy manager D) Manager with a degree in real estate
B) A highly detailed orientated manager who documents everything
Which power gives government to right to take private property? A) Intestate succession B) Eminent domain C) Escheat D) Adverse possession
B) Eminent domain
A seller has prepaid taxes on his or her property for the entire year. He or she will close a sale involving this property on July 15. Calculating the amount using a banking year, for what time period has this seller prepaid taxes that the buyer would be responsible for reimbursing the seller at closing? A) Six months and 15 days B) Five months and 16 days C) Five months and 14 days D) Five months and 15 days
B) Five months and 16 days
Which of the Following is the fastest growing means of advertising real estate? A) Newspapers B) Internet C) Billboards D) Radio
B) Internet
Which of the following statements is CORRECT about a house that is newer than surrounding properties, considering the principle of conformity? A) It would be of decreased appraised value based on progression B) It would be of decreased appraised value based on regression C) It would be of an increased appraised value based on progression D) It would be of an increased appraised value based on regression
B) It would be of decreased appraised value based on regression
Which of the following items do appraisers use to prove the physical condition of a property as being accurately described in their appraisal report? A) Oral report B) Photo journal C) Written report D) Limitation statement
B) Photo journal
What best describes a consideration? A) Gift B) Promise C) Transfer D) Receipt
B) Promise
Which act prohibits kickbacks and other ethically dubious fees associated with settlement services? A) HUDA B) RESPA C) FIRPTA D) TRELA
B) RESPA Real Estate Settlement Procedures Act
Which of the following statements about the Interstate Land Sales Full Disclosure Act is TRUE? A) No interstate sales transactions are exempt from this Act B) The Act requires those who sell 25 or more properties to file a statement of record with HUD C) Once a purchaser sign a purchase contract, the developer must provide him or her with a property report D) The Act applies only to property being offered for sale, not to leased property
B) The Act requires those who sell 25 or more properties to file a statement of record with HUD
Which of the following is TRUE regarding a property manager? A) An owner is a customer to the property manager B) The employment agreement make a manager and agent of the owner C) A manager is usually just classified as a special agent rather than general agent D) There is no officially recognized relationship between the owner and manager
B) The employment agreement make a manager and agent of the owner
What is a return? A) The spendable income from an investment after deductions B) The fundamental measure of investment performance C) The value of a property D) Wages, commissions, and fees for service from an income
B) The fundamental measure of investment performance
Which of the following statements BEST describe the secondary market? A) The secondary market is where the loans are placed after the borrower closes the loan B) The secondary market is where loans are bought and sold C) The secondary market is where all assumed loans are serviced D) The secondary market is where non-conforming loans are originated
B) The secondary market is where loans are bought and sold
When is the latest that a buyer must receive the closing Disclosure form? A) Three days before closing B) Three business days before closing of the loan C) on the day of closing D) Three days after closing
B) Three business days before closing of the loan
When do lenders have to provide borrowers with the Closing Disclosure form? A) Two days before the loan closes B) Three days before the loan closes C) Seven after the loan closes D) Whenever
B) Three days before the loan closes
Which of the following costs would be accrued items at a real estate closing? A) Fuel on hand B) Unpaid water bill C) General real estate taxes D) Tax reservers for the mortgage
B) Unpaid water bill
What is used to describe the amount of space in any three-dimensional area? A) Area B) Volume C) Weight D) Height
B) Volume
Among the following documents, Which one is LEASE LIKELY to be required by a lender prior to settlement or closing? A) Fire and Hazard insurance policies B) A property survey C) A property deed D) A pest inspection certificate
C) A property deed
What environmental information should licensees disclose? A) Only information regarding environmental problem that fall within their area(s) of expertise B) Only the facts that they personally observe regarding a property's environmental problem, in order to prevent misrepresentation C) Any information about environmental problems that might affect a prudent buyer's decision(s) about a property D) Only fact about environmental problems that a seller needs to know since they might lower the property's value
C) Any information about environmental problems that might affect a prudent buyer's decision(s) about a property
Title insurance policies do NOT protect policyholders from which of the following things? A) Fraud B) Forged documents C) Bankruptcy D) Clouds on a title
C) Bankruptcy
Suppose That person A dies intestate and the probate court cannot locate any heirs to person A's estate. In such a case, Person A's property becomes the property of the state under which rule? A) Statute of Frauds B) State of limitations C) Doctrine of escheat D) Law of descent and distribution
C) Doctrine of escheat
Which of the following is a highly specialized area in the real state industry? A) Land B) Real Estate Owned (REO) Property/Foreclosures C) Farm and Ranch D) Short Sales
C) Farm and Ranch
Which part of a deed generally determines what type of deed is being used to transfer the title to real property? A) Habendum clause B) Acknowledgement C) Granting clause D) Title of the deed
C) Granting clause
When an individual dies without leaving a valid will, he or she is described as having died____________________ A) Testate B) Interstate C) Intestate D) Instate
C) Intestate
Which one of the following statements is TRUE a fully amortized loan? A) It has interest only payments until a set date at which time there is a balloon payment that fully pays of the principal of the loan B) It is paid into an escrow account C) It will reduce its principal balance with equal payments over time until it is payed off D) It is a loan in which the interest rate increases based on an index such as the Treasury bill
C) It will reduce its principal balance with equal payments over time until it is payed off
Which of the following steps would you take to convert a decimal to a percentage? A) Move the decimal 2 places to the left and add the % sign B) Move the decimal 1 place to the right and add the % sign C) Move the decimal 2 places to the right and add the % sign D) Move the decimal 1 place to the left and add the % sign
C) Move the decimal 2 places to the right and add the % sign
Which indoor hazard is a gas that enters a property via well water, from the ground below a structure and from building materials? A) Mold B) Lead C) Radon D) Formaldehyde
C) Radon
What are the two main types of commercial real estate? A) Blocks and Towers B) Office and Towers C) Retail and Office D) Retail and Malls
C) Retail and Office
Which appraisal approach depends on the principle of substitution? A) Income capitalization B) Cost C) Sales comparison D) Income capitalization and sales comparison
C) Sales comparison
Which of the following deeds is generally distinguished by a covenant asserting that the grantor did not personally encumber the title during the period of his or her ownership? A) Bargain and sale B) Quitclaim C) Special warranty D) General warranty
C) Special warranty
Which of the following factors is NOT part of the USPAP definition of a situation that produces market value? A) Buyer and seller are typically motivated B) Both parties are well informed or well advised, and acting in what they consider their best interests C) The property is not allowed exposure in the open market D) Payment is made in terms of cash in United States dollars or in terms of comparable financial arrangements
C) The property is not allowed exposure in the open market
What is the Gross Annual Rent? A) The total amount of rental income to be subtracted expressed as a percentage of gross annual rent B) The gross annual rent minus the rental income lost C) The total amount of rent paid by the tenant or tenants on the property for one year D) Maintenance Expenses on the property & Miscellaneous Costs
C) The total amount of rent paid by the tenant or tenants on the property for one year
Which of the following statement is NOT a reason that a document should be notarized before it can be entered into a public record? A) To guarantee the authenticity of any signatures on the document B) To ensure that anyone signing the document does so voluntarily C) To guarantee the effectiveness of the notary's commission D) To verify the identity of the person who wants to record the document
C) To guarantee the effectiveness of the notary's commission
Which of the following statement is NOT a reason that the document should be notarized before it can be entered into a public record? A) To guarantee the authenticity of any signatures of the document B) To ensure the anyone signing the document does so voluntarily C) To guarantee the effectiveness of the notary's commission D) To verify the identity of the person who wants to record the document
C) To guarantee the effectiveness of the notary's commission
If an insurance policy costs $500 a year, What is the daily rate of the policy in a statutory year? A) $0.72/day B) $1.18/day C) $1.25/day D) $1.39/day
D) $1.39/day A banker's (statutory) year 360 days (30 days in each month) $500 divided by 360 = 1.3888888 or $1.39/day
What is the maximum fine for an intentional violation of the Endangered Species Act? A) $500 B) $25,000 C) $50,000 D) $100,000
D) $100,000
Which of the following fractions is improper? A) 1/2 B) 2/3 C) 1/4 D) 8/3
D) 8/3
Which of the following must the buyer do before closing? A) Ensure that the proper professional ( e.g., title abstracters or title insurance agents) examine all records and paperwork associated with the title, including public records, current and past leases, evidence of title, the deed and any documents connected with liens or other encumbrances B) Making sure that the property survey is accurate, perhaps by asking an independent surveyor to examine it C) Conduct a final inspection (or walk-through) with a professional inspector to ensure that the property is as the seller has represented it to be D) All Of The Above
D) All Of The Above
Which of the following are required for Qualified Mortgage (QM): A) The fees on the loan must not exceed 3% of the loan amount including the loan origination fee B) Lender will be allowed to charge discounts fees up to 2% over and above the 3% required C) No risk featured on loans originated such as ballon payments and negative amortization D) All of the above
D) All of the above
Which of the following is a risk associated with real estate investment? A) Financial risk B) Market changes C) Economic changes D) All of the above
D) All of the above
Fiduciary obligations require that property managers: A) Be responsible for property maintenance B) Handle all funds of the owner C) Make decisions on behalf of owner D) Always put their employers interest first
D) Always put their employers interest first
Which one of the following entities does NOT jointly regulate and make the laws in the appraisal industry? A) The Appraisal Foundation B) FIRREA C) USPAP D) CERCLA
D) CERCLA
Which type of investment risk involves the loss of investment or earrings through failure to make payment when due? A) Business risk B) Liquidity risk C) Environment risk D) Financial risk
D) Financial risk
Which of the following terms refers to the most productive and efficient use of a parcel of land? A) Plat B) Non-conforming use C) zoning variance D) Highest and best use
D) Highest and best use
Which of the following is NOT typically paid into an escrow account? A) Taxes B) Special assessments C) Hazard insurance D) Interest
D) Interest
Which of the following sentence is true of property management? A) Property management does not include leasing B) Property management includes only leasing C) Property management includes only leasing and evictions D) Property management includes leasing, duties of finance management, collecting rent, marketing and evictions
D) Property management includes leasing, duties of finance management, collecting rent, marketing and evictions
Which borrower would NOT be eligible for a VA guaranteed loan? A) Qualified borrower who is currently on active military duty B) Qualified borrower whose spouse was killed in action in the military C) Qualified borrower who has retired from military service D) Qualified borrower that is a government employee
D) Qualified borrower that is a government employee
Which covenant is included in a tenant's leasehold estate? A) Seisin B) Against encumbrances C) Further assistance D) Quiet enjoyment
D) Quiet enjoyment
Under CERCLA, Which one of the following parties is held responsible for toxic waste sites? A) The city B) The manufacturer of the containers C) The original producer of the hazardous substance D) The transporter of the hazardous substance to the facility
D) The transporter of the hazardous substance to the facility
What is the purpose of a payoff statement? A) To detail a property's tax and insurance payments B) To show the final division of expenses and funds between a buyer and a seller C) To be issued by the escrow agent at closing D) To record the exact amount required to pay off an existing loan
D) To record the exact amount required to pay off an existing loan
When is a property considered at an arm's length? A) When the principal parties of a transaction already know each other B) When there is no or a very small initial payment for a purchase C) When the sale is forced D) When the interest of the seller or the buyer is not involved & there is no under pressure
D) When the interest of the seller or the buyer is not involved & there is no under pressure
