CE Shop Course 1

A homestead property owner has failed to pay their taxes by May 15th. What penalty will be assessed on July 1?

1% The first day of the month following the due date, an additional penalty of 2% for homestead property is assessed. The first day of each subsequent month through December, an additional penalty of 1% is assessed (to both homestead and nonhomestead properties).

Related to real estate financing, how much is a point?

1% of loan value

Private mortgage insurance may be required on conventional loans where the loan-to-value ratio is in excess of ______%.

80 Loans above this amount don't conform to Fannie Mae/Freddie Mac guidelines, so a lender may require PMI to offset the risk.

A developer who wants to build a condo complex by a lake

A developer would need to clear plans with the Environmental Quality Board before building.

Percentage Lease

A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

Toxic loan features

A qualified mortgage may not include interest-only payments and balloon payments, or lender fees and points that total more than 3% of the loan

subdivision

A subdivision is undeveloped land that's being divided for sale to individuals or developers

Which of the following things that can occur is likely to terminate an option to purchase?

A violation of any of the lease terms could terminate the option to purchase. Of these four actions, the only one likely to violate the lease terms is subletting without permission, since most leases have a clause requiring lessor permission to sublet.

Grace found herself in a breach of contract situation where the other party met some of the terms but not others. Grace thought it would cost a lot of time and money to sue, so she decided to accept the work that had been done and call it good. This is an example of ______.

Accepting partial performance

This is a renewal year in Minnesota and you're applying to renew your salesperson license. When does your license expire?

All licenses expire on June 30 of the expiration year.

Common elements are those parts of a condo complex that belong to _______.

All owners, Common elements include everything except the individually owned units, such as hallways, roof, grounds, pools, and spa areas.

Which of the following is a true statement about FHA financing?

An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments.

Which of the following is more likely to act as a closing agent?

An attorney or title company representative is usually the closing agent. A closing agent's role is to coordinate all of the paperwork and funds to complete the transaction.

Easement by necessity

An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

Easement Appurtenant

An easement created to benefit adjacent land.

Which of these is an encroachment?

An encroachment occurs when someone illegally places a structure or object on another person's property. Jeff's installation of a sidewalk off of his property is an example.

uestion 120 Harriet, an out-of-state licensee, is friends with Tonya, a licensee with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which statement about this fee is true?

As long as the payment goes through both brokerage firms, it's legal to pay an out-of-state licensee a referral fee. Tonya would only need to disclose the compensation if she were receiving the referral fee.

Which product's fibers are dangerous when inhaled because they can lodge in the lungs and intestines, causing cancer?

Asbestos

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step?

Before Percy even begins looking for properties, he should get pre-qualified. He may also consider getting pre-approved.

Which document establishes path and proof of ownership?

Chain of title

The phases of an environmental assessment include investigation, testing, ______ , and management.

Cleanup

Which fiduciary duty never ends?

Confidentiality

Consideration

Consideration is the giving of something of value in exchange for something of value.

Which of the following is an included covenant(s) in a warranty deed?

Covenant of right to convey

Easement by Prescription

Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public.

Which of the following is an allowed expenditure from Minnesota's Real Estate Education, Research, and Recovery Fund?

Creating a university real estate department and a position to chair that department The fund can pay for real estate courses or a related chairperson position at Minnesota universities.

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession?

Darrel is a mortgage broker. Brokers work with multiple lenders and aren't tied to a specific suite of loan products, as mortgage bankers may be.

Which document is used to establish proof of ownership and to transfer the title?

Deed

Which task is NOT the responsibility of an escrow officer?

Determine how earnest money is to be distributed in case of a dispute. The escrow officer is responsible for distributing the earnest money as outlined by the parties or the courts in case of dispute but doesn't have the authority to determine how it should be distributed.

Which of the following actions would violate the Minnesota statute related to trust account requirements?

Disbursing trust funds upon written request of the buyer Statute 82.75 outlines four events that can trigger a disbursement of trust funds. These are the closing of a transaction, written agreement by both parties, court order, and cancellation of a residential purchase agreement.

title insurance representative

Ensures the title is marketable by performing a title search and provides the buyer with an abstract of title and title protection

What information does the Loan Estimate NOT provide to buyers under required disclosures law?

Final closing costs

Bradley is acting as a finder for Emma. He's introduced her to Rachel, the other party in the transaction. Whom does Bradley represent?

Finders aren't agents, and don't represent any parties in the transaction.

Which of the following is a useful tool in determining the most ethical course of action?

Follow the Golden Rule

Which of the following is a benefit of a redeemable ground lease?

Ground leases can be redeemable (available to be bought out by the ground tenant after a specific period of time).

Which of the following is true about a home equity line of credit?

Home equity lines of credit may be tapped over and over, provided the withdrawals don't exceed the credit balance.

Stephanie and Carter are married owners of a Minnesota property that they wish to claim as a homestead. Which of these statements is true?

If the claimant is married, either spouse can claim homestead title. The exemption applies to either or both of their debts, so creditors can't force the sale of the home to satisfy personal loans or credit card debt.

Which of the following is true about easements appurtenant?

If the dominant and servient properties are merged into one land parcel, there's no need for an easement anymore.

Which of the following conditions will legally void a subdivision sales contract in Minnesota?

If the subdivision wasn't properly registered, the contract is voidable by the buyer.

Carter and Joanie own property in Minnesota and just received their $2,400 tax statement. Which of the following best describes how they'll handle their property tax payment?

In Minnesota, annual tax statements are issued by March 31. Property taxes are due in equal installments on May 15 and October 15. If the total tax bill is less than $100, the full amount is due on May 15.

What makes a contract enforceable?

In order to turn a verbal offer into an enforceable purchase agreement, the contract must be in writing. In addition, the terms and conditions must be stated, and the seller must sign the contract.

Why did the implementation of TRID impact closing dates?

Increases in the annual percentage rate, the addition of a pre-payment penalty, or changes to the basic loan product require that the lender issue a new Closing Disclosure, necessitating a new three-day waiting period.

Which form of alienation occurs without the owner's consent?

Involuntary alienation occurs without the owner's consent. An example is eminent domain.

override clause

It provides for seller to pay the full commission to broker for any sale to registered prospects within the specified period after the termination of the contract.' 72 hours

What's a possible penalty for providing false information on a license renewal application?

License suspension

Which of these actions is Darcy safe to take without potentially crossing into unauthorized practice of law?

Licensees must be careful not to draft their own contract forms or strike through required contract paragraphs. Using standard, approved language is required in order to stay within the confines of one's real estate license.

In Minnesota, what's true about the disclosure of material facts?

Licensees should disclose physical property conditions to any potential buyers, particularly if they contradict any third-party reports.

TILA disclosure requirements

Loans for commercial purposes don't require TILA disclosure. Loans for personal purposes do, even when the collateral used is a business.

Where, and by when, must a Minnesota licensee provide notification of an address change?

Name or address changes must be reported to the Minnesota Department of Commerce within 10 days.

What is the federal program that was created to help mitigate future flood losses across the country?

National Flood Insurance Program (NFIP)

What is a per se antitrust violation?

One in which no intent needs to be proven to establish a violation has occurred

license

Permission to do something on another's land without actually possessing any interest or ownership in the land

Thomas is a builder in Minnesota. He regularly acquires land to construct residential, commercial, or industrial buildings with the intent to sell the property after construction is complete. He doesn't have a real estate license, but isn't violating any license laws. Which of the following is true?

Persons acquiring real estate related to construction of residential, commercial, or industrial buildings with the intent to then sell those don't need a license unless they're involved in at least 25 transactions in a 12-month period.

Which type of power gives the government the authority to do what's right for the public good and the owner may or may not be compensated?

Police power

Sophie only has 15% to put down on her new home. What might the lender require in order for Sophie to obtain conventional financing?

Private mortgage insurance, Because Sophie's LTV ratio will be greater than 80%, most lenders will require private mortgage insurance to cover the lender's interests, though there are exceptions. PMI covers the gap between required down payment (e.g., 20%) and actual down payment.

Which of the following is a legal term that can mean the right to take products out of the soil?

Profit

Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements?

Qualified mortgage with a safe harbor status, The safe harbor is the lender's ability to prove compliance

The NAR Code of Ethics includes which protected classes in its definition of discriminatory behavior?

Race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity

In the real estate business, whose primary role is to estimate property value based on established valuation guidelines?

Real estate appraiser

Which of these is the best definition of real estate?

Real estate includes land, plus all things permanently attached to it naturally or artificially.

Which of the following is considered a rental service?

Rental service is someone who gathers, organizes, and provides information to specific lessors and lessees related to rentals. Newspapers, other general circulation publications, and listing agreements aren't considered rental service.

A ______ is a limit placed on a private owner's use of land.

Restrictive covenant A restrictive covenant is a part of a deed or lease to real property that limits what the owner of the land or lease can do with the property.

Quentin brought an application before city council to build a shopping mall on 17 acres south of town that currently don't have a zoning designation. The council referred him to the planning commission, which will review the application in light of the city's ________.

Since the parcel isn't currently zoned, zoning should be established in alignment with an area's comprehensive plan.

Which of the following lists items that likely contain asbestos, if manufactured before 1970?

Soundproofing and decorative material, pipe and furnace insulation materials, shingles, and siding.

Gross Lease

Tenant pays rents, landlord pays all expenses of property; most common form of residential lease

Jennings has received a Closing Disclosure from his lender. What's the purpose of this form?

The Closing Disclosure, provided at least three business days before closing, details the buyer's closing costs, as well as other loan terms, such as the projected monthly payment.

Which Minnesota law protects its dwindling wetlands?

The Minnesota Wetland Conservation Act protects the state's wetlands.

How long does the borrower have to rescind or cancel a new mortgage obtained for an already owned property?

The borrower has three days after loan application to rescind or cancel.

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?

The borrower will have 180 payments (assuming the loan isn't paid off early). This is 12 monthly payments per year for 15 years: 12 x 15 = 180.

When a city is determining zones, what should be followed?

The comprehensive plan, a city or county's comprehensive plan outlines future development plans and goals of the area. Zoning decisions should follow this plan.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?

The lender has requested a title audit to ensure that the foreclosure was properly handled. Lenders may request a title audit to ensure that the bank that owns Carly's property performed the foreclosure correctly.

A consumer received payment from the Minnesota Real Estate Education, Research, and Recovery Fund to satisfy a judgment against a Minnesota licensee. Which statement best describes the consequences the licensee faces?

The license will be suspended until the licensee pays back double the amount disbursed, plus interest

Fee Simple Absolute

The maximum possible estate or right of ownership of real property, continuing forever. Entire Bundle of Rights Included

Which one of the following provides the best example of single agency?

The only time single agency exists is when one agent and one firm represent one side of the transaction.

Contracts may use the terminology ______ after the assignor's name to make it clear that the contract is assignable.

The phrase "and/or assigns" helps make it clear that the contract is assignable.

Minnesota Homestead Exemption Amounts

The property can't exceed a half acre within a city or town, or 150 acres everywhere else.

Who's responsible for paying for recording documents to clear all defects from the title?

The seller is responsible for paying for any recording documents to clear any defects from the title. That way, the seller can convey clear, marketable title to the buyer.

There are three types of listing agreements. They are exclusive right to sell, _______, and open listing.

The third type of listing agreement is the exclusive agency agreement, in which only one broker lists the property, but the seller or landlord reserves the right to find a buyer or tenant himself, thereby avoiding paying a brokerage fee.

A listing broker in Minnesota received a commission check from the seller at closing. The broker would be committing a license law violation if he were to deposit the check in a ______ account.

Trust accounts should only be used to hold money on behalf of clients. An exception to this is a broker depositing personal funds to pay account fees or maintain a minimum balance.

Corrine is selling her home in a short sale transaction. What's her likely situation?

Typically, sellers who opt for short sales do so in order to avoid a foreclosure because of some financial problem—such as job loss or a balloon payment—that makes them unable to afford their mortgage payment.

Which of these is an example of good consideration?

Valuable consideration differs from "good" consideration, which may merely be consideration of affection, such as when a person gives a family house to her child, receiving love and goodwill in return.

You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?

You and the other licensee from your firm are in a dual-licensee dual agency relationship. The broker is the dual agent and has designated you to represent the buyer and the other licensee to represent the seller.

Net Lease

lease in which the tenant pays some or all of the operating expenses of the property in addition to rent

Voluntary Alienation

the legal term for the voluntary transfer of title

Easement in Gross

the right to use land for a specific, limited purpose unrelated to any adjacent parcel

Involuntary Alienation

transfer of title without the grantor's consent