Final RE Notes

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80%

An agent has a signed listing agreement with his clients. In exchange for helping the clients list, market, and sell their home, they have agreed to pay the agent a commission. What type of agreement is being made between the agent and the clients?

A contract involving an exchange of promises or other consideration between two parties is a bilateral contract.

Related to title insurance, what is "subrogation"?

A covered party grants permission to the title company to pursue the party who caused a claim or loss

What's the penalty for violating federal do not call rules?

A fine of more than $40,000 for each violation

Nick and Chris tine own a Taco Bell franchise. They built the restaurant on land they've leased from the Fargood Foundation. What type of lease do they have?

A ground lease is a situation where the ground is owned by one entity and someone else leases the ground so they can build something. These are usually long-term leases to allow the builder to recoup the cost of the building

Which one of the following best describes an attorney title opinion?

A statement of opinion on the status of the property's title, based on the abstract of title

Why would buyers want to know whether a property is currently experiencing a tax abatement?

A tax abatement lowers property taxes for a period of time. If a buyer purchases a property in year nine of a 10-year abatement, the taxes will likely rise after year 10 and could rise significantly. This will impact home ownership affordability.

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?

A trustee will hold title until the loan is paid.

Which of these is excluded on a title insurance policy because of the schedule of exceptions?

A verbal lease agreement

Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

An ad can show the APR without disclosing all the other credit terms. But if certain other "trigger" terms are included, such as down payment, payment amount, number of payments, or interest rate (other than APR), this would require full disclosure.

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

An agent from one firm acts as the agent for the buyer.

What is an appraisal?

An opinion or estimate of a property's value as of a specific date

Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to, and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue?

Arbitration

A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what's the list price for this parcel? Round to 10ths of an acre for your calculation.

Area = length × width. One mile = 5,280 feet. The area of this parcel is 7,920,000 s.f. ([5,280 ÷ 2] × 3,000). One acre = 43,560 s.f. The parcel is 181.8 acres (7,920,000 ÷ 43,560). So, the list price is $763,560 ($4,200 × 181.8)

Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell's loss of acreage?

Avulsion

Bethany has several clients who've used Jerrica, a local mortgage broker, for their mortgage loans. Jerrica recently referred a buyer client to Bethany. Through her broker, Bethany sent Jerrica a $200 gift card as a referral fee. Which one of the following statements best represents this transaction?

Bethany and her broker violated federal (and perhaps state) laws prohibiting referral fees to certain third-party vendors.

SARA is an amendment to which environmental act?

CERCLA. SARA, the Superfund Amendments and Reauthorization Act, is an amendment to CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act, which says that "innocent landowners" aren't responsible for clean-up of hazardous contamination.

A deed states, "For love and affection, the receipt and sufficiency of which is hereby acknowledged." What does this statement represent in the deed?

Consideration

Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?

Consideration, which is an essential element of a contract, is something of value which is given from one party to the other party in exchange for goods or services.

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?

Corporations are legal entities and hold property similar to the way a sole proprietor or an individual does: in severalty.

Which one of these is an example of the doctrine of estoppel?

Corrie shows Marvin several properties and prepares CMAs for each. She assists him in making an offer on one. He becomes difficult to work with, and she then says she's not his agent because they don't have a signed agency agreement

Which approach to value measures the cost to produce a property, including land acquisition and construction costs?

Cost approach

With the cost approach to value, what is the replacement cost?

Cost to build a functionally equivalent improvement

What factors does the underwriter consider in reviewing a mortgage loan application?

Credit, capacity, and collateral

Through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee?

Deed

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?

Defeasance

A homeowner lives in a state that requires an abstract of title for property conveyance, but the chain of title was broken 50 years ago. What is the status of the title?

Depending on state laws, the homeowner may have marketable title.

The Truth in Lending Act requires lenders to make certain ______ to consumers.

Disclosures

What's an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires?

Discount point

The Amarals are purchasing the house of their dreams and have plans to stay in it for at least the next three decades while they pay back their conventional 30-year loan. Their primary focus, over the life of the loan, is to reduce their payments as much as possible. What is something that could help them achieve this?

Discount points

Net operating income is determined by subtracting total operating expenses from the ______

Effective gross income

Which real property ownership right protects the owner from harassment or interference?

Enjoyment

Which written statement will be used to consider ways to minimize a project's negative impact on the environment?

Environmental impact statement

A home equity line of credit (HELOC) is based on the homeowner's available ______

Equity

If a buyer includes a clause in the offer that reads, "Buyer to beat all competing offers by $1,000 up to a price of $700,000," the offer is considered what type of offer?

Escalator

Which type of leasehold lasts for a defined period of time and automatically terminates when that period ends?

Estate for years

Which of the following is the most common type of buyer representation agreement?

Exclusive right-to-represent agreement

Which agency enforces fair housing law?

FHEO

Which act created the Office of Fair Housing and Equal Opportunity under the Department of Housing and Urban Development?

Federal Fair Housing Act of 1968

The Swansons left the family property to their son, Jason, with the stipulation that he does not build on it. The type of estate Jason holds is ______.

Fee simple defeasible

Pennsylvania law allows timeshare purchasers ______ days from contract execution to cancel the purchase.

Five

Stu is buying Freddie's property. What must occur for the transfer of title to take place?

Freddie must intend to convey the property to Stu.

Freehold vs leasehold estate

Freehold: Ownership is for an indeterminate length of time Leasehold: Grants possession, but not title, to the owner, and is for a limited period of time

Juan has finalized his comparables and is ready to determine a property's appraised value. How does he do this?

He reviews his process and places more weight on the most similar comparables that he believes to be the most valid.

When appraising a property, what type of property would be best suited to the cost approach?

Historical properties

Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination?

Housing for Older Persons Act of 1995

Jake continued performing real estate activities in Pennsylvania even though he failed to keep his license current. Which of the following actions could the commission take?

Impose civil penalties of as much as $1,000

In addition to fines, individuals who violate antitrust laws may face imprisonment for up to what length of time?

Individuals who violate antitrust law may be liable for up to a $1 million fine and up to 10 years of imprisonment

Which of the following actions would violate Pennsylvania's Human Relations Act?

Jamie is a property manager of several buildings and doesn't show units on the first floor to women. There are exemptions to the act on the basis of sex, including rooms in landlord-occupied properties that have a common entrance, single-sex dorms, and rooms in one's own personal residence that share common living areas.

Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have?

Joint tenancy does not include the right of inheritance; ownership interest passes to the remaining tenants once a tenant dies.

Carlton listed his property with an agreement end date of August 31. The property went under contract on May 12 and closed on July 2. When did Carlton's listing agreement officially terminate?

July 2

Abigail is a Pennsylvania broker who supervises several salespersons and associate brokers. Which of these forms outlines how much will be paid to her when she or any of her associated licensees engages in a transaction?

Listing agreement

A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.

Loan-to-value

What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?

Market value

Edward, a Pennsylvania broker, is going through transaction files from one year ago. Which of the following items can be disposed of?

Most transaction documents and contracts must be retained for three years. Consumer Notices and sub-agent and transaction licensee agreements only need to be retained for six months

When this value is negative, it is a sign that the investment property cannot bring in enough money to cover its costs to maintain.

Net operating income

On which type of property would the cost approach typically be used when determining value?

New construction

Effective gross income ‒ ______ = net operating income

Operating expenses

Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here?

Plottage

Which of these is what a buyer has paid for a property and what the seller has accepted?

Price

A family owns a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?

Prior appropriation

A potential investor has inherited $250,000 and wants to use that as a down payment on an investment property. What additional information do you need to calculate ROI for each potential investment?

Projected cash flow

Which of the following would be a good source of replacement and reproduction costs when using the cost approach to determine value?

Published indexes and tables

Under RESPA, a rebate of a licensee's commission may be offered to a transaction party, provided which of the following is true?

RESPA permits licensees to offer cash rebates of their commission to buyers and sellers as long as no part of the rebate is required for referral of business.

A homeowner owned an acreage in a rural area. They sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered the homeowner several million dollars for the entire acreage, and they eagerly accepted the offer. What covenant is the homeowner in danger of violating?

Seisin

Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend's neighborhood. It's listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here?

Substitution

A "homes for sale" magazine contains the following ad: "Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!" Which of these statements is true?

The ad complies with TILA because it doesn't contain any of the trigger terms that require full disclosure of all financing terms.

To make valid computations of adjustments for the market comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements has the highest priority?

The elements appraisers consider in the market comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics

Which statement regarding fee simple defeasible estates is true?

The estate includes the full bundle of legal rights, but ownership is based on a condition.

What happens after a foreclosure if there isn't enough money from the sale to pay off all of the lien holders against a property?

The former owner may owe a debt to lien holders who aren't fully paid.

Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now?

The lender tells the trustee to release the title to Olivia.

Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened?

The previous owners redeemed the property by paying all mortgage payments and fees

You just helped a client buy a house in a neighborhood that's experiencing a rejuvenation. Which of these is likely to occur?

The property will be reassessed as a result of the sale, and this, along with the neighborhood rejuvenation, may cause the taxes on that property to go up.

Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit.

Two competing firms are found guilty of illegal market allocation. Which of the following scenarios must be true?

The two firms have agreed not to compete in one another's markets

What special concern do foreclosed properties often present?

There could be hidden title issues.

Once buyers submit their loan application, they must be given their Loan Estimate. At the very least, they must receive the Loan Estimate within ______.

Three business days after submitting the loan application

How many parties does a deed of trust involve?

Three: borrower, lender, and trustee

Why is it important to publicly record a deed?

Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

A property manager has accounted for all sources of income on a rental property and needs one more piece of information to determine the effective gross income. What information is needed?

Vacancies and credit loss

What is the most common way that asbestos enters the body?

When asbestos fibers decay or are disturbed, the friable particles can be inhaled.

Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?

Whether consent was voluntary

Imagine that you're an active real estate licensee as well as an architect, and you'd like to partner with a builder who's just beginning a development. Which of these creates agency coupled with interest?

You agree to design the houses for this builder in return for getting the listings when the properties are finished.

Balloon payment (represents)

a final loan payment that is much larger than the regular monthly payments (some principal remains at end of loan term)

sales comparison order

financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristic

reproduction cost

the cost to build an exact replica of the subject, with the same materials and deficiencies