Contracts & Regulations 11 Test
Ricardo privately owns a single 20-acre parcel of land and wishes to sell ten acres. Which of the following statements is correct regarding Ricardo's options? A: He is not required to register with the real estate commission but must meet local and state requirements for dividing his land B: Because he is the private owner, there are no restrictions or registration requirements C: Only a registered subdivider may divide land, thus Richard as a private owner may not sell part of a single parcel D: Richard must comply with federal land sales rules
A: He is not required to register with the real estate commission but must meet local and state requirements for dividing his land Division of a single parcel into multiple parcels is a subdivision and must be done in compliance with local and state subdivision restrictions. They only have to be registered with the CREC if there are 20 or more residential lots being sold, leased, or transferred.
If walls, floors, or ceilings are designed as the boundaries of a unit, which items would not be included as part of the unit? A: Insulation behind the wallboard B: Wallpaper and paint C: Tile and carpet D: Plasterboard and plaster
A: Insulation behind the wallboard Insulation is behind the wall, the other items are either the wall itself or on the inside of the wall to the unit.
If a homeowner or time-share owner doesn't pay their homeowner dues to the association, what remedy does the association have? A: Lien the property B: Lien the personal belongings of the unpaid owner C: Encumber the owner's business D: Garnish the wages of the owner
A: Lien the property The association may lien the property.
An apartment owner wants to convert his twenty-one-unit complex into time shares. He must register the time-shares with: A: The real estate commission B: The Colorado time-share commission C: The subdivision committee
A: The real estate commission Subdividing any residential property into 20 or more units for sale, transfer, lease or timeshares must be registered with the Colorado Real Estate Commission.
A developer would be required to register with the real estate commission for which of the following projects? A: conversion of an apartment complex into 25 residential condominiums B: condominium office park with 40 office warehouse units for sale C: mini-warehouse project with over 100 storage units D: subdivision of 100 acres into 10 sites for residential use
A: conversion of an apartment complex into 25 residential condominiums In Colorado, the subdivision developer's registration law requires registration for any property "divided into twenty or more interests solely for residential use and offered for sale, lease, or transfer."
A townhouse would be legally described as: A: lot and block B: unit and building C: lot and building D: none of the above
A: lot and block Townhomes are a series of individual houses having architectural unity and a common wall between each unit. Their legal description is by lot & block. Condominium's legal description is by unit # in building #. Despite townhomes sharing walls they are treated just like single family homes - they have an address, they sit on a lot, in a block. Condos are a unit in a building, on a lot, on a block. Just to make certain you are completely confused, there is an interesting angle regarding townhomes. When a multi-family development is first built, the developer must get approved by FHA in order for customers to use FHA financing to purchase the homes. If the development has both condos and townhomes, the developer must make and pay for two FHA approvals. In order to save money many developers choose to call them all condos. So in this case you can actually end up with a home that physically looks like a townhome, but is legally a condo. Just one of the quirks of real estate.
The Interstate Land Sales Full Disclosure Act regulates the interstate sale of unimproved lots. It is designed to: A: prevent fraudulent marketing schemes when land is sold prior to being seen B: prevent the buyers from seeing the true value of the land C: increase the sales relationships between states D: protect HUD from irate buyers who should have known better
A: prevent fraudulent marketing schemes when land is sold prior to being seen The act is administered by the Secretary of Housing and Urban Development, through the office of Interstate Land Sales registration. It is designed to prevent fraudulent marketing schemes, when land is being sold without being seen.
If a group of people form a cooperative housing corporation, they will each buy: A: stock certificates B: furniture for the common areas C: items to maintain the common areas D: one portion of the area
A: stock certificates Such corporation shall provide each stockholder in said corporation with the right to occupy for dwelling purposes, a house or an apartment in a building owned or leased by said corporation.
In a condominium, what must the declaration allocate to each unit? A: Air space equivalent to the ownership interest in the community B: A percentage of the undivided interests in the common elements C: A percentage of the undivided interests in the income of the association D: A position on the board of directors
B: A percentage of the undivided interests in the common elements A condominium is an estate in real property consisting of an individual interior in an apartment or commercial unit and an undivided common interest in the common areas in the condo project.
All of these are examples of a common area of a condominium EXCEPT: A: Laundromat B: Designated parking place C: Swimming pool D: The land
B: Designated parking place A designated parking place is not common area since it is defined as a right of one condominium owner.
A condominium owner has what type of ownership? A: Group ownership B: Fee simple C: Estate in trust D: Proprietary lease
B: Fee simple None of the others are a type of ownership.
Company S has purchased an old warehouse they plan to convert into lofts. They should have 30 lofts when finished. This would be considered: A: common sub-community B: a subdivision C: a financial risk D: condominiums
B: a subdivision A subdivision includes conversions of a pre-existing building into units of 20 or more. If these are to be residential lofts, the conversion must be registered with the CREC.
A Condominium owner files a declaration with the county clerk which divides his individual ownership and ownership in common elements into time-share units. Each time-share owner will have individual ownership of the common elements for three weeks each year. The condominium owner may have created: A: a planned unit development B: a subdivision C: a townhouse complex D: a cooperative project
B: a subdivision This would be creating a subdivision.
Corporations that build structures on land they own may sell the land and building together, without licensing, provided that the sales are made by: A: agents for the seller B: corporate officers or regularly salaried employees C: transaction agents
B: corporate officers or regularly salaried employees Corporate officers or regularly salaried employees are exempt from license law.
When zoning authorities restrict particular land to accommodate an average maximum number of houses per acre, this is known as: A: cluster zoning B: density zoning C: maximum zoning D: gross zoning
B: density zoning Density zoning ordinances restrict the average number of houses per acre that may be built within a particular subdivision.
Frequently, a lot or an improvement does not conform to the zoning use because it was grandfathered. This is known as : A: conforming use B: nonconforming use C: variance use D: illegal use
B: nonconforming use It existed before the enactment or amendment of the zoning ordinance and is grandfathered into the new zoning. Any fundamental change such as residential to commercial or more commonly vice versa would require a zoning change or a request for a non-comforming use from the existing zoning regulations from the Board of Adjustments (this name changes from governmental entity to another). The tricky part for zoning changes or waiver requests for grandfathered non-conforming properties is they often open up a can of worms for the owner. Changing the functionality of a grandfathered property may also trigger requirements from the government to bring the property in conformance with the zoning. An example of that in Denver occurred very publicly a few years back in a case involving the Firehouse Car Wash on 6th Avenue. A grandfathered car wash in a zoned residential area had bad relationships with the neighbors - they added a separate detail shop on the premises. The neighbors went to the City saying the car wash had added new functionality and thus no longer qualified as a grandfathered non-conforming use of the premises. The neighbors won and the car wash was shut down.
Building codes would most likely control: A: density B: type of materials used in buildings C: size of commercial buildings D: deed restrictions
B: type of materials used in buildings Building codes would most likely control the types of materials used in buildings.
A developer wants to divide a 15-acre tract into lots that are 50 feet by 90 feet each. The developer must allow 80,000 square feet for streets and green space, how many lots can be developed by the subdivision? A: 123 B: 125 C: 127 D: 128
C: 127 Here are the steps: 1) Figure out the total square footage of the tract : 15 (acres) X 43560 ( sq ft in an acre) = 653,400 sq ft 2) Subtract the non-buildable square footage set aside for street and green space: 653,400 - 80,000 sq ft (amount set aside for streets and green space) = 573,400 Sq ft 3) Determine the square footage of one lot: 50 x 90 = 4500 4) Divide the total buildable square footage by the square footage of one lot: 573,400/ 4500 (sq ft in each lot) = 127.42 5) The answer is 127. A common error on this type of question occurs when the fraction is greater than .50, such as 127.75. Students often round up and assume the answer is 128. The problem with this is rounding up does not make more dirt. That is reserved for a higher power than a developer. If a buildable lot is 50 x 90 then a smaller lot than that is not buildable.
After what point will the owner of these new lofts need to turn control of the homeowner's association over to the homeowners? A: After 60% of the homes are sold B: After the first title is conveyed C: No later than 60 days after conveyance of 75% of the maximum number of units D: Developers are never required to relinquish control of the homeowner's association
C: No later than 60 days after conveyance of 75% of the maximum number of units The owner will need to turn over the homeowner's association no later than 60 days after conveyance of 75% of the maximum number of units.
A buyer of a time-share has one unique right not shared by buyers in the resale market. It is: A: a limited interest in the common area B: the ability to choose which unit will be theirs C: a five-day right of rescission D: a longer time to sell their old property
C: a five-day right of rescission No developer shall employ a contract that contains a provision waiving a buyer's right to such a cancellation period. This cancellation period runs until midnight on the 5th day following execution of the contract.
Each owner of a time-share estate therein shall: A: share responsibility in the title encumbrances B: be individually liable to the unit's association for all assessments and taxes C: be individually liable to the unit's association for all assessments and taxes but be responsible for only a fraction of such assessments and taxes D: purchase items of interest only for their private use in the unit
C: be individually liable to the unit's association for all assessments and taxes but be responsible for only a fraction of such assessments and taxes Each owner is only responsible for a fraction of such assessment and taxes.
Each time-share estate is: A: encumbered separately but conveyed all at once B: conveyed and encumbered by one blanket policy C: encumbered and conveyed separately D: none of the above
C: encumbered and conveyed separately Each time-share estate is encumbered and conveyed separately.
The Interstate Land Sales Full Disclosure Act stipulates: A: a prospectus must be filed with OILSR B: it requires developments to be registered if they are selling less than 100 lots or condominiums C: it requires developments to be registered if they are selling more than 100 lots or condominiums D: prospective purchasers must inspect property prior to purchase to prevent fraud
C: it requires developments to be registered if they are selling more than 100 lots or condominiums The Interstate Land Sales Full Disclosure Act of 1968 (ILSFDA or ILSA or "Act") was an act of Congress passed in 1968 to facilitate regulation of interstate land sales, to protect consumers from fraud and abuse in the sale or lease of land. The Act was patterned after the Securities Act of 1933 and required land developers to register subdivisions of (currently 100 or more) non-exempt lots or condominium units. Originally, the filings were to be with the United States Department of Housing and Urban Development. Currently, the responsibility for administering the Act [1] and its regulations [2] is with the Bureau of Consumer Financial Protection (CFPB). A regulated developer is to provide each purchaser with a disclosure document called a Property Report. The Property Report contains relevant information about the subdivision and must be delivered to each purchaser before the signing of the contract or agreement and gives the purchaser at a minimum a 7-day period to cancel the purchase agreement.
A security is a financial instrument backed by assets. They give the holder an interest or right in something else. Regulation under state or federal securities laws may apply to which of the following? A: speculative purchase of raw land by a doctor as part of a retirement plan B: condominium project that includes both residential and retail uses within one structure C: resort condominium project in which owners enter their units in a common rental pool to enhance their income
C: resort condominium project in which owners enter their units in a common rental pool to enhance their income The common rental pool arrangement for increasing income may qualify this offering as a security.
No common interest community, except cooperatives, can be created until: A: the people vote on an association B: the land is cleared of debris C: the plat map for the common interest community is recorded
C: the plat map for the common interest community is recorded The plat map for the common interest community must be recorded.
The term "subdivision" does not include: A: a group of 20 or more time shares intended for residential use B: the conversion of an existing structure into a common interest community of at least 20 or more residences C: the selling of campground memberships D: a group of 20 proprietary leases in a cooperative housing corporation
C: the selling of campground memberships The key term is "20 or more" to be considered a subdivision; excluding the selling of campground memberships.
The seller under a land contract is also known as: A: the vendee B: leasee C: the vendor D: leaser
C: the vendor A vendor is a seller under a land contract, while a vendee is a buyer. Neither a leaser nor a leasee has anything to do with land contracts.
In Colorado, a developer must register with the real estate commission for which of the following projects? A: Mini-warehouse project with over one hundred storage units B: Condominium office park with 40 office warehouse units for sale C: Subdivision of 100 acres into 10 sites for residential use D: Conversion of an apartment complex into 25 residential condominiums
D: Conversion of an apartment complex into 25 residential condominiums A developer must register with the real estate commission for the conversion of an apartment complex into 25 residential condominiums.
The Government's police powers enable the state to regulate and control the use of land through: A: Condemnation B: Special assessments C: Escheat D: Zoning Laws
D: Zoning Laws Zoning laws give the government the opportunity to control land use.
A plat map shows: A: streets B: parks C: blocks D: all of the above
D: all of the above Plats are developed by the subdivider and must be approved by the municipality before they can be recorded.
In the case where there is a homeowner's association to oversee a common interest community, and there are several common interest communities within one large community, a master association shall: A: hold all powers, rights, obligations, assets, and liabilities of all communities B: monitor all communities within their domain regarding the planned architectural criteria set forth in the declarations C: assume responsibility for the common elements between each community D: all of the above
D: all of the above The master association shall be responsible for all of these.
The difference between condominium and townhome is: A: in the floor plan B: in the bylaws C: whether garages are attached D: the legal description
D: the legal description First of all you need to know the difference between a physical description of a townhome vs a condo and their legal description. They are not the same. A townhome is a multifamily home with no one above or below, whereas a condo can share walls, floors and ceiling with other units. That is a physical description. Whereas a legal description does not pay attention to what they look like but instead describes where they are. The legal description for a condo is simple as it specifies the unit and building. Townhomes have an address just like a single family home so their legal description contains a lot (usually the street number) and block. Now, here is the part that will blow your mind. When multifamily developments are made, the developer has to have the complex approved by FHA to qualify the homes to be bought using FHA loans. If the developer had both townhomes and condos in the development they have to pay two large application fees to FHA, one for the townhomes and one for the condos. Since developers do not like to pay two fees, they sometimes bypass one of them by classifying all the homes as condos regardless of what they look like. In complexes where this has occurred, you end up with a unit that looks like a townhome but legally because of the legal description is a condo.