MRE_Final Exam Practice Test
(Unit Practice) A seller wants to net $165,000 from the sale of a house after paying the broker's fee of 6%. The seller's gross sales price, to the nearest dollar, will be A) $175,532. B) $174,900. C) $155,000. D) $182,242.
A) The answer is $175,532. Two steps: (1) Find what percentage of the selling price the seller will get after the broker takes 6% (100% - 6% = 94%). (2) Because the amount the seller wants to net is $165,000, which is also 94% of the gross selling price, find the actual gross selling price (to the nearest dollar) by dividing $165,000 by 94% ($165,000 ÷ 94% = $175,531.91, or $175,532).
(Unit Practice) According to a broker's comparative market analysis (CMA), a property is worth $225,000. The homeowner bought the property for $190,000 and added $50,000 in improvements, for a total of $240,000. The property sold for $222,500. Which amount represents the property's market price? A) $222,500 B) $240,000 C) $225,000 D) $190,000
A) The answer is $222,500. A CMA provides an estimate of market value based on an analysis of comparable sales. Market price is the amount for which a property actually sells.
(Unit Practice) A real estate professional leased a building for 10 years at an annual rent of $48,000. She will receive a commission of 7.5% for the first five years, 5% for the next three years, and 3.5% for the final two years. What will her gross income be from this commission over the life of the lease? A) $28,560 B) $30,000 C) $18,000 D) $25,200
A) The answer is $28,560. $48,000 annual rent × 7.5% = $3,600 annual commission and $3,600 × 5 years = $18,000 commission for the first 5 years; $48,000 annual rent × 5% = $2,400 annual commission and $2,400 × 3 years = $7,200 commission for next 3 years; $48,000 annual rent × 3.5% = $1,680 annual commission and $1,680 × 2 years = $3,360 commission for final years; $18,000 + $7,200 + $3,360 = $28,560 total commission over the life of the lease.
(Unit Practice) In a $13,500 loan with an interest rate of 6%, what is the amount of semiannual interest payment? A) $405 B) $810 C) $59,655 D) $20,250
A) The answer is $405. A semiannual interest payment is paid twice a year. To find the amount of the payment, divide the annual interest amount by 2: $13,500 × 6% (0.06) (the interest rate) = $810 (annual interest amount); $810 ÷ 2 = $405 (semiannual interest).
(Unit Practice) The Maryland Guaranty Fund may reimburse members of the public for actual losses up to A) $50,000. B) $10,000. C) $5,000. D) $20,000.
A) The answer is $50,000. The Maryland Guaranty Fund may reimburse members of the public up to $50,000 for actual losses caused by licensees and their employees.
(Unit Practice) Roxanne paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for Roxanne's monthly PITI payment? A) $63.23 B) $63 C) $75.60 D) $75.88
A) The answer is $63.23. Tax rate = 700 mills ÷ 1,000 = 0.7 ÷ 100 = 0.007 Assessed value $135,500 × 80% = $108,400 $108,400 × 0.007= $758.80 annual taxes $758.80 ÷ 12 = $63.23 monthly tax
(Unit Practice) What is the sale price of a 1.25-acre lot that is 150 feet deep if the selling price of the lot is $26,500 per front foot? A) $9,619,500 B) $3,975,000 C) $1,442,920 D) $932,800
A) The answer is $9,619,500. 1.25 acres × 43,560 (sq. ft. per acre) = 54,450 (total sq. ft.) ÷ 150 ft (the depth of the lot) = 363 front feet × $26,500 per front foot = $9,619,500 (the selling price). The term front foot refers to a unit on frontage of a lot, usually the street frontage or water frontage. When two dimensions are given for a tract and not labeled, the first dimension is the frontage. Each front foot extends the depth of the lot.
(Unit Practice) What advance notice must be given by developers who desire to convert apartment buildings more than five years old into time-share projects? A) 120 days' notice to each tenant B) Notice to each tenant within 10 days from filing the public offering statement C) 180 days' notice to each tenant D) No prior notice
A) The answer is 120 days' notice to each tenant. The Maryland Time-Share Act requires that a developer converting a residential rental building into a time-share holding give its residents 120 days' advance notice and provide them with other assistance in certain circumstances.
(Unit Practice) How many acres are contained in a parcel with the following legal description: the NW¼ of the SE¼ and the S½ of the SW¼ of the NE¼ of Section 4? A) 60 acres B) 40 acres C) 80 acres D) 50 acres
A) The answer is 60 acres. To calculate acres in a survey system legal description, multiply all the denominators and divide that number into 640 acres. In this problem, multiply denominators for the first part: 4 × 4 = 16; 640 acres ÷ 16 = 40 acres; multiply denominators for the second part 2 × 4 × 4 = 32; 640 ÷ 32 = 20 acres; then add 40 acres + 20 acres = 60 acres.
(Unit Practice) If the borrower paid $189.06 interest last month on a $27,500 loan, what is the interest rate? A) 8¼% B) 7¾% C) 7% D) 8%
A) The answer is 8¼%. $189.06 monthly interest × 12 months = $2,268.72 annual interest; $2,268.72 annual interest ÷ $27,500 loan amount = 0.08249 or 8¼% interest rate.
(Unit Practice) If a home sold as a mortgage foreclosure does NOT bring an amount sufficient to satisfy the outstanding mortgage debt, the mortgagor may be responsible for A) a deficiency judgment. B) a default judgment. C) liquidated damages. D) punitive damages.
A) The answer is a deficiency judgment. A deficiency judgment entitles the mortgagee to a personal judgment against the borrower for the unpaid balance when a foreclosure sale does not produce enough cash to pay the loan balance in full after deducting expenses and accrued unpaid interest. It may also be obtained against any endorsers or guarantors of the note and against any owners of the mortgaged property who assumed the debt by written agreement. The mortgagee is not entitled to any damages. A default judgment is a judgment in favor of a plaintiff when a defendant does not appear in court.
(Unit Practice) When a mortgage loan has been paid in full, it is important for the borrower to be sure that A) a satisfaction of mortgage is recorded. B) they obtain a deed of partial reconveyance. C) the paid note is placed in a safe deposit box. D) the paid mortgage is returned to the lender.
A) The answer is a satisfaction of mortgage is recorded. Satisfaction of mortgage needs to be recorded in the public record to show that a mortgage debt is no longer a lien on the property.
(Unit Practice) A document that protects against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called A) a title insurance policy. B) an abstract of title. C) a chain of title. D) a certificate of title.
A) The answer is a title insurance policy. Although a certificate of title is used as evidence of ownership, it is not perfect against unrecorded liens or hidden defects. A title insurance policy protects the policyholder from title defects.
(Unit Practice) Tina buys a cat and keeps it in her apartment, even though her apartment lease includes a clause that prohibits tenants from owning a pet. She does not remove the cat even after the landlord gives her a written reminder of the lease agreement and insists that she remove the pet from the apartment. Tina refuses, saying that the cat is very small and will cause no damage to the apartment. The landlord decides to remove Tina due to the breach of the lease agreement. The legal process to remove the tenant is known as A) actual eviction. B) partial eviction. C) eminent domain. D) constructive eviction.
A) The answer is actual eviction. A tenant's breach of a lease can result in a court action known as actual or judicial eviction. Constructive eviction occurs when a tenant abandons a property because the landlord has breached the lease. Eminent domain is the government's power to take land for public use.
(Unit Practice) If Harold does not want to be obligated to purchase a property but would like to have the right to purchase a property within 60 days for $300,000, Harold should try to negotiate A) an option. B) a purchase money mortgage. C) a contract for deed. D) a purchase agreement.
A) The answer is an option. An option contract would allow Harold the time to determine if he wants to buy and has the advantage of locking the seller into selling at a price agreed to at the beginning of the process. Contract for deed and purchase money mortgages are forms of seller financing and would not give this type of flexibility. Both require a purchase agreement to create the terms of the financing.
(Unit Practice) A real estate salesman shows a house constructed in 1919 to a prospective buyer. The buyer has two small children and is worried about potential health hazards. Which of the following statements is TRUE? A) Because of the age of the house, there is a good likelihood of the presence of lead-based paint. B) Removal of lead-based paint and asbestos hazards is covered by standard title insurance policies. C) Because the salesman is a licensed real estate salesperson, he can offer to personally inspect for lead and remove any lead risks. D) Lead-based paint is more of a threat to adults then children.
A) The answer is because of the age of the house, there is a good likelihood of the presence of lead-based paint. Lead-based paint was common in housing interiors until outlawed in 1978. There is great likelihood of the presence of lead-based paint in such an old building, even if many layers of nonleaded paint have been applied over it. Real estate licensees are not qualified to inspect for or remove any lead-based hazards. Lead-based paint is more of a threat to children then adults. The removal of environmental hazards is not covered by any insurance policy including standard title insurance policies.
(Unit Practice) Which of the following describes an offer that the seller has accepted and proper notice has been given to the buyer of the seller's acceptance? A) Executory contract B) Executed contract C) Unilateral contract D) Assignment
A) The answer is executory contract. The period from when the contract is agreed to and signed by both parties until it is executed (closed) is called the executory period. Executed contracts have been closed. Unilateral contracts bind only one party such as an option. Assignments transfer the contract duties but not liabilities.
(Unit Practice) In order for a deed to be valid, the A) grantor must be legally competent. B) grantee must sign the deed. C) signature of the grantee must be witnessed. D) deed must be recorded.
A) The answer is grantor must be legally competent. Competency of the grantor is one of the requirements for a valid deed. The grantor must be of lawful age and sound mind. Witnessing the grantee's signature is never needed as the grantee does not sign the deed and recording a deed is not required for validity of the deed.
(Unit Practice) Maryland's requirements for a real estate broker licensee's office include all the following EXCEPT A) it must be a place where the firm regularly conducts insurance sales. B) it must have a sign visible to the public that includes the words Real Estate, REALTOR®, or Realtist, whichever is applicable. C) it must have on display the license of the broker and every affiliate who works out of that office. D) records of all trust monies must be kept there in a secured area and available to the Commission's inspectors on demand.
A) The answer is it must be a place where the firm regularly conducts insurance sales. It must be the place where the firm regularly conducts real estate, not insurance, transactions. The other three requirements are stated accurately.
(Unit Practice) To qualify for a salesperson real estate license, an applicant must A) obtain written commitment from a licensed real estate broker who will accept the applicant as a salesperson of the firm. B) be at least 21 years old. C) successfully complete a 135-hour course. D) be prepared to open his own real estate office in an approved location.
A) The answer is obtain written commitment from a licensed real estate broker who will accept the applicant as a salesperson of the firm. To qualify for a real estate salesperson license, an applicant must be at least 18 years of age, successfully complete a 60-hour course in real estate, pass the written examination, and obtain written commitment from a licensed real estate broker who will accept the applicant as a salesperson of the firm.
(Unit Practice) A broker took a listing and later discovered that the client had been declared legally incompetent before signing the listing. The listing is now A) of no value to the broker because it is void. B) binding because the broker was acting as the owner's agent in good faith. C) renegotiable. D) the basis for the recovery of a commission if the broker produces a buyer.
A) The answer is of no value to the broker because it is void. A contract made by a person who has been adjudicated insane is void on the theory that the judgment that this is not a competent party is a matter of public record.
(Unit Practice) A real estate professional is selling a home to a buyer and told her that the foundation was "solid as a rock" when he knew for a fact that it was slowly sinking into the landfill on which it was built. Now that the sale is completed, which of the following is LEAST likely to happen to the real estate professional?A)Successful defense against all charges based on loyalty to his client-sellerB)Suit to recover money damages experienced by the buyer due to basement leakageC)Being charged with intentional misrepresentationD)Revocation of his license for failure to disclose a material fact"
A) The answer is successful defense against all charges based on loyalty to his client-seller. The duty of disclosure includes relevant information or material facts that the real estate professional knows or should have known, regardless of whether those facts are favorable or unfavorable to the principal's position.
(Unit Practice) A person with a physical disability has found an apartment that must be remodeled to accommodate her needs. Which of the following statements is FALSE? A) That the disabled tenant will be required to pay a larger security deposit to cover the costs of returning the unit to its original condition B) That the landlord can review the renovation plans and require qualified contractors to perform the work C) Lease terms may require the tenant to return the property to its original condition D) Lease terms may state the tenant will pay for all the renovations
A) The answer is that the disabled tenant will be required to pay a larger security deposit to cover the costs of returning the unit to its original condition. Federal fair housing laws prohibit discrimination against a disabled person. A landlord may not require a larger security deposit from a disabled tenant. A disabled person has the right to reasonably modify the space at his or her expense. The landlord has the right to approve the modifications and may insist that the changes be made by qualified contractors. The landlord may also require the tenant to place money in an escrow account to restore the space to its original condition when the tenant moves out. Putting all the terms into writing will protect all parties.
(Unit Practice) Which of the following statements about the covenant of quiet enjoyment is TRUE? A) The grantor ensures that the title will be good against the title claims of third parties. B) The grantor guarantees that if the title fails in the future, he or she will compensate the grantee. C) The grantor promises to obtain and deliver any instrument needed to make the title good. D) The grantor warrants that he or she is the owner and has the right to convey title to the property.
A) The answer is the grantor ensures that the title will be good against the title claims of third parties. Quiet enjoyment means freedom from any claims to the title by third parties, persons other than grantor and grantee. The other guarantees and promises are warranted through the covenants of warranty forever, seisin, and further assurance. A general warranty deed provides all of these covenants.
(Unit Practice) The owner of a secluded area adjacent to an ocean noticed that people from town walked along the shore in front of his property. The owner learned that the local citizens had been walking along this beach for several years. He went to court to try to stop people from walking along the water's edge in front of his property. The owner is likely to be A) unsuccessful because the owner's property extends only to the high-water mark and the public may use the land beyond this point. B) unsuccessful because the local citizens have been doing this for years and thus have an easement. C) successful because the owner's property extends to the low-water mark. D) successful because the owner can control access to his own property.
A) The answer is unsuccessful because the owner's property extends only to the high-water mark and the public may use the land beyond this point. Under the doctrine of littoral rights, an owner whose land borders an ocean would own the property up to the mean high-water mark. Any land below this is owned by the government. The homeowner could not block other people from walking along the water's edge.
(Unit Practice) In a situation where a homeowner conveys property to her uncle with a deed, and then the uncle records the dead, when did title to the property actually transfer or pass to the uncle? A) Upon delivery and acceptance of the deed B) Upon recording of the deed C) Upon the delivery of consideration D) Upon delivery and acceptance of the contract
A) The answer is upon delivery and acceptance of the deed. Title is transferred upon delivery and acceptance of the deed. At that moment, the deed is binding between the parties. When the uncle later records the deed, he is then protected against claims of third parties. Contracts do not transfer title. A valid deed must contain a clause acknowledging that the grantor has received consideration, but the consideration in itself does not transfer the title to the property.
(Unit Practice) A buyer offers $26,280 for a 20% share in a property. What is the total value of the property? A) $32,850 B) $131,400 C) $31,536 D) $105,120
B) The answer is $131,400. $26,280 offer ÷ 20% share = $131,400 total value of property.
(Unit Practice) Susan and Curtis are applying for a home loan. Susan has an annual gross income of $102,000 and Curtis earns $72,000 a year. They have monthly car payments of $875, monthly credit card payments of $620, and their monthly grocery expenses come to $1,200. If the lender uses debt ratios of 28% and 36% to qualify them, what is the maximum monthly housing expense they will qualify for? A) $5,220 B) $3,725 C) $4,060 D) $2,525
B) The answer is $3,725. $102,000 + $72,000 = $174,000 ÷ 12 = $14,500/month $14,500 × 28% (0.28) = $4,060 $14,500 × 36% (0.36) = $5,220 - $1,495 other recurring debt = $3,725
(Unit Practice) An appraiser estimated the replacement cost new of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. What is the current value of the building? A) $560,000 B) $420,000 C) $392,000 D) $140,000
B) The answer is $420,000. 30 years remaining life ÷ 40 years economic life = 75%; $560,000 replacement cost × 75% = $420,000 current value.
(Unit Practice) A property owner wishes to net $56,500 from the sale of a vacant lot. After paying an advertising allowance of $160 and a 7% commission, what must the selling price be (rounded to the nearest dollar)? A) $60,455 B) $60,925 C) $60,626 D) $60,753
B) The answer is $60,925. $56,500 net proceeds + $160 ad allowance = $56,660; $56,660 ÷ 93% (100% total costs - 7% commission) = $60,925 sales price.
(Unit Practice) A buyer bought a house for $125,000. The house, which had originally sold for $118,250, appraised for $122,500. Based on these facts, if the buyer applies for an 80% mortgage, what will be the amount of the loan? A) $106,750 B) $98,000 C) $100,000 D) $94,600
B) The answer is $98,000. A lender's loan-to-value (LTV) ratio uses either the appraisal or the sales price for the value. The amount a property sold for at a previous transaction is irrelevant. In this case, the appraisal is less than the current selling price. If the loan is 80% of the value and the appraisal is used as the value, use this calculation to find the loan amount: $122,500 × 80% = $98,000.
(Unit Practice) How many acres are in the property described as follows: the NW¼ of the SW¼ of the NE¼ of Section 16? A) 5+ B) 10 C) 20 D) 40
B) The answer is 10. Multiply denominators: 4 × 4 × 4 = 64; 640 acres (one section) ÷ 64 = 10 acres.
(Unit Practice) What is the interest rate in a mortgage that requires an interest payment of $1,500 made every 3 months on a $50,000 loan? A) 9% B) 12% C) 6% D) 3%
B) The answer is 12%. $1,500 × 4 (every 3 months is ¼ of a year) = $6,000 (the annual interest). $6,000 ÷ $50,000 (the loan amount) = 12% (0.12).
(Unit Practice) A man allows his neighbor to store her camper in his yard for a few weeks until he needs the space. The man does not charge his neighbor rent for the use of his yard. The man has given his neighbor A) an easement by necessity. B) a license. C) an estate in land. D) an easement appurtenant.
B) The answer is a license. A license is a personal privilege to enter the land of another for a specific purpose, and the right is given orally or informally.
(Unit Practice) General real estate taxes are also called A) general, voluntary liens. B) ad valorem taxes. C) appropriation funds. D) special assessments.
B) The answer is ad valorem taxes. General real estate taxes are based on the value of the property being taxed and are called ad valorem (according to value) taxes. They are specific, involuntary liens.
(Unit Practice) A woman bought acreage but never saw it and did not use it; although, she regularly paid the real estate taxes on it. Without her knowledge, a man moved his mobile home onto the property, drilled a well for water, and lived there for many years. The man may have become the owner of the acreage if he complied with state laws regarding A) the statute of frauds. B) adverse possession. C) intestate succession. D) the statute of limitations.
B) The answer is adverse possession. If possession by the man in his mobile home has been open, notorious, continuous, hostile, and adverse, there must be proof of such for a statutorily prescribed period. State law may also require that the occupant pay property taxes, which is one warning sign to an absentee owner that should warrant investigation.
(Unit Practice) A man leases a store space to open a restaurant. He installs ovens, booths, counters, and other equipment. When would these items become real property? A) After the man defaults on his rental payments B) At lease expiration, if the man does not remove them C) After they are installed D) After the lease takes effect
B) The answer is at lease expiration, if the man does not remove them. Trade fixtures are personal property, but if they are not removed by the tenant, they become part of the real property.
(Unit Practice) Which of the following is an involuntary alienation of property? A) Quitclaim B) Condemnation C) Inheritance D) Gift
B) The answer is condemnation. Condemnation is an operation of the law that carries out an involuntary transfer (alienation).
(Unit Practice) A father conveyed the family home to his daughter by will as a pur autre vie estate for the life of her mother. If the daughter should die before the mother, who gains possession of the property? A) Mother B) Daughter's heirs C) Father's other children D) Remainderman
B) The answer is daughter's heirs. A life estate based on the lifetime of a person other than the life tenant is called an estate pur autre vie. The daughter is the life tenant, but the measuring life is the mother's. The daughter's heirs will inherit the daughter's life estate, but it will end when the mother dies.
(Unit Practice) A person owned a parcel of land. Subsequent to the owner's death, the probate court determined the distribution of the land in accordance with the state's statutes. This process is called A) condemnation. B) probate. C) escheat. D) adverse possession.
B) The answer is probate. Probate is a formal judicious process whose purpose is to see that the assets are distributed correctly. Probate courts distribute assets according to statute only when no other reasonable alternative, such as a valid will, exists.
(Unit Practice) A man has defaulted in the payment of several of his debts, and the court has ordered his property sold to satisfy his obligations. A title search revealed several outstanding liens against the property to be sold. Which of the following liens has highest priority? A) Mechanic's lien for work started two months before the mortgage was recorded B) Real estate tax lien for the current year C) Outstanding first mortgage lien dated and recorded one year ago D) Judgment lien rendered and recorded last month
B) The answer is real estate tax lien for the current year. Tax liens usually have priority over previously recorded liens.
(Unit Practice) In which of the following situations must the licensee present the Commission's disclosure of agency representation form? A) Transaction involves unimproved property zoned commercial B) Residential purchase prospect refuses buyer representation C) Brokerage services are for a residential leasehold of three months (90 days) D) Prospect wants to lease a property improved by five single-family units
B) The answer is residential purchase prospect refuses buyer representation. A purchase prospect who declines to sign a buyer's agreement is unrepresented and must be given an agency representation disclosure (Understanding Whom Real Estate Agents Represent) form before the end of the first scheduled face-to-face meeting with the licensee. The other three choices are situations to which the requirement does not apply. They are situations specifically exempted by § 17529 of the Brokers Act.
(Unit Practice) Breach of contract is refusal or failure to comply with the terms of a contract. If the seller breaches the purchase contract, the buyer may do all of the following EXCEPT A) rescind the contract and recover the earnest money. B) sue the broker for nonperformance. C) sue the seller for damages. D) sue the seller for specific performance.
B) The answer is sue the broker for nonperformance. The broker is not a party to a real estate sales contract and could not be sued for nonperformance in the event of a seller's breach.
(Unit Practice) Which of the following is TRUE of salespersons' real estate licenses? A) They must be maintained in personnel files by their brokers. B) They must be kept in the salesperson's offices. C) They are to be carried by the salespersons when performing acts of real estate brokerage. D) They must be placed and kept in a safe place chosen by the salespersons.
B) The answer is they must be kept in the salesperson's offices. Salespersons' and associate brokers' licenses must be displayed in the brokers' branch office out of which they work.
(Unit Practice) Grantee is to a deed as devisee is to a A) estate. B) will. C) trust. D) leasehold.
B) The answer is will. A grantee is the person to whom the property is conveyed. A person who receives property by will is a devisee.
(Unit Practice) A business tenant has a percentage lease stating rent payment is the greater of 2% of his total gross sales volume or a minimum base rental of $1,000 per month. In the past year, his sales totaled $435,000. How much rent did he pay? A) $8,700 B) $8,460 C) $12,000 D) $20,700
C) The answer is $12,000. 12 months × $1,000 per month = $12,000 minimum annual base rent; $435,000 gross sales × 2% = $8,700. The tenant paid $12,000 because the minimum base rent was more than the percentage of gross sales.
(Unit Practice) What is the maximum penalty that the Maryland Real Estate Brokers Act authorizes the Commission to impose on a licensee? A) $15,000 B) $2,000 C) $25,000 D) $5,000
C) The answer is $25,000. The Commission may impose a fine as high as $25,000 for a third offense and/or suspend or revoke the license of the offender. Violations prosecuted by the attorney general, on the other hand, may result in fines as high as $25,000 in addition to possible imprisonment for periods from one to three years.
(Unit Practice) What is the maximum amount that a claimant may receive from the Guaranty Fund on losses from one transaction? A) $500,000 B) An unlimited amount C) $50,000 D) $5,000
C) The answer is $50,000. The maximum loss that is covered is $50,000 per transaction.
(Unit Practice) A standard rectangular survey system section contains A) 160 government lots. B) 160 acres. C) 640 acres. D) 36 townships.
C) The answer is 640 acres. Each township contains 36 sections, and each section is one square mile, or 640 acres.
(Unit Practice) All the following clauses in a loan agreement enable the lender to demand the entire remaining debt be paid immediately EXCEPT A) a due-on-sale clause. B) an alienation clause. C) a defeasance clause. D) an acceleration clause.
C) The answer is a defeasance clause. A defeasance clause requires a lender to execute a satisfaction when the note has been fully paid.
(Unit Practice) A woman conveys a life estate to her grandson and stipulates that upon her death the estate will pass to her son-in-law. The son-in-law has A) a legal life estate. B) a reversionary interest. C) a remainder interest. D) an estate for years.
C) The answer is a remainder interest. When a life estate ends, it is replaced by a fee simple estate. The future interest the woman's son-in-law has in the fee simple estate that will convey to him when the life estate ends is called a remainder interest.
(Unit Practice) A real estate professional is helping a buyer and a seller fill out a sales contract but is not representing either party. The real estate professional is A) an unlicensed broker. B) a designated broker. C) a transactional broker. D) a traditional broker.
C) The answer is a transactional broker. In transactional brokerage, a real estate professional facilitates the transaction between a buyer and a seller but does not represent either party and cannot negotiate for either party. A transactional broker must be licensed.
(Unit Practice) Franklin bought acreage in a distant county, but never went to see the acreage and did not use the land. After the purchase, Susan moved her mobile home onto the land, drilled a well, and lived on the property for 20 years. Susan may become the owner of the land if she has complied with the law regarding A) quitclaim deeds. B) voluntary alienation. C) adverse possession. D) prescriptive easements.
C) The answer is adverse possession. The woman may file an action in court to receive title to the property if she has complied with state laws. Her possession must have been open, notorious, continuous and uninterrupted, hostile and adverse. Adverse possession is a form of involuntary alienation. A quitclaim deed is frequently used to correct an error in a deed or to release an interest in a property. Prescriptive easements while similar to adverse possession are used to gain permanent access to the property not title.
(Unit Practice) The type of deed in which the granting clause states "grant, bargain, and sell" is a A) general warranty deed. B) reconveyance deed. C) bargain and sale deed. D) special warranty deed."
C) The answer is bargain and sale deed. A bargain and sale deed contains no express warranties but implies that the grantor holds title and possession. The granting clause usually contains the phrase "grant, bargain, and sell.
(Unit Practice) The federal Fair Housing Act prohibits all of the following EXCEPT A) redlining. B) discriminatory advertising. C) discriminating on the basis of marital status. D) blockbusting.
C) The answer is discriminating on the basis of marital status. Marital status is not one of the seven protected classes under the federal Fair Housing Act. The Act and regulations based on the Act do prohibit discriminatory advertising, redlining, and blockbusting.
(Unit Practice) A person who acquired ownership that can be inherited, with the provision that the land must always be used for recreational purposes, has which of the following? A) Restricted estate B) Fee simple estate C) Fee estate subject to condition subsequent D) Estate that cannot be sold
C) The answer is fee estate subject to condition subsequent. A fee simple defeasible is a qualified estate, and one type is subject to a condition subsequent. This means that the new owner must not perform some action or activity.
(Unit Practice) Elizabeth grants a parcel of land to her church for as long as the parcel is used for religious purposes. The church's ownership rights to the parcel constitute a A) fee simple absolute estate. B) life estate. C) fee simple defeasible estate. D) leasehold estate.
C) The answer is fee simple defeasible estate. The religious organization's ownership of the land is qualified by the limitation that the land be used for religious purposes. The limitation creates a fee simple defeasible or qualified fee estate. If the religious organization decides to use the property for some other purpose, title to the property may revert back to the woman or her heirs. A fee simple absolute estate is the highest form of real estate ownership. A life estate is limited to the life of the estate owner or some other designated person. A leasehold estate is an estate of possession only granted from the property owner to a tenant and lasts for a fixed period of time.
(Unit Practice) All of the following are generally exempt from paying real estate taxes EXCEPT A) municipal government. B) charitable hospital. C) for-profit assisted living facility. D) private not-for-profit school.
C) The answer is for-profit assisted living facility. Most state laws exempt property from real estate taxation if used for tax-exempt purposes. A for-profit entity would generally not qualify for this exemption.
(Unit Practice) Which of the following is the BEST way to ensure that there are no encroachments and verify the boundaries of a parcel of land? A) Verify the benchmarks B) Write a legal description C) Get a spot survey D) Find the monuments
C) The answer is get a spot survey. A spot survey shows the location of all improvements on a property and whether they extend over the property lines.
(Unit Practice) Jamal and Tina bought a store building and took title as joint tenants. Tina died testate. Jamal now owns the store A) as a tenant in common with the dead woman's heirs. B) as a joint tenant with rights of survivorship. C) in severalty. D) in trust.
C) The answer is in severalty. Joint tenancy includes the right to survivorship, to the property passing to the other owner(s) upon the death of one tenant. In this case, Jamal and Tina took title as joint tenants, meaning that upon one's death, there is only one owner who owns the property in severalty. In a tenancy in common, the owners own an undivided fractional interest in the property and that interest is passed on according to the owner's will, to heirs, or to a trust.
(Unit Practice) Susan, a listing broker, presents an offer to her client, a seller, with a selling price much lower than what the seller is asking for the property. The offer allows the seller 24 hours to accept. Susan recommends the seller counter the offer and leaves a blank counter with the seller. The seller emails Susan in the morning saying that based on the wishes of her children, who are not on the title, she has accepted the offer. It this case the offer A) gives the buyer possession until closing. B) is a valid contract which may be voidable due to fraud. C) may be a voidable contract due to duress. D) is void due to undue influence by the children.
C) The answer is may be a voidable contract due to duress. The seller would have to claim her children forced her to accept the buyer's offer under duress in order to terminate the contract or make it voidable. Void contracts lack one or all of the essential elements of a contract. A contract must be entered into freely and voluntarily by each party, without undue influence. Duress, undue influence, misrepresentation, fraud, or a minor party entering into a contract are all circumstances that may create a contract that is voidable by the injured party.
(Unit Practice) A new licensee was excited about his first listing. However, the owner told him that it would be harder to find a buyer if they discussed the problems with water in the basement. They agreed to wait to see if a home inspector would notice anything. After the sale, the buyers discovered the problem. Under these circumstances, the licensee A) should offer to split the cost of the repair between the seller, buyer, and himself. B) can rely on the broker to figure out a solution. C) may face disciplinary action from the Maryland Real Estate Commission. D) does not have to worry because the licensee only followed the instructions of the seller.
C) The answer is may face disciplinary action from the Maryland Real Estate Commission. The Maryland Real Estate Commission may reprimand a licensee and/or suspend or revoke the license of any licensee who intentionally or negligently fails to disclose to any person with whom they deal the material facts that they know or should know that relate to properties with which they deal.
(Unit Practice) What determines the amount of commission set in a listing agreement? A) Local boards or associations of REALTORS® B) State Real Estate Commission sitting in executive session C) Mutual agreement between the parties to the agreement D) Maryland statute
C) The answer is mutual agreement between the parties to the agreement. It is a cardinal principle of federal and state antitrust legislation that competing providers of a service such as real estate brokerage are not to establish, try to establish, or even discuss with one another the fees they charge the public.
(Unit Practice) Which of the following listing agreements permit owners of a listed property to sell the property on their own without having to pay the listing broker a commission? A) Exclusive-right-to-sell listing and exclusive-agency listing B) Exclusive-agency listing only C) Open listing and exclusive-agency listing D) Open listing only
C) The answer is open listing and exclusive-agency listing. In an exclusive-agency listing, one brokerage is authorized to act as the exclusive agent of the principal. However, the seller retains the right to sell the property without obligation to the brokerage. In an open listing, the seller retains the right to employ any number of brokers to sell the property. In an open listing, the seller is obligated to pay the listing broker a commission only if the listing broker is the procuring cause of the sale. In an exclusive-right-to-sell listing, if the property is sold while the listing is in effect, the seller must pay the broker a commission regardless of who sells the property.
(Unit Practice) Which of the following would be the BEST description of a listing contract? A) Escrow contract B) Sales contract C) Personal service contract D) Property management contract
C) The answer is personal service contract. A listing is a personal employment contract between a broker and his or her client setting forth the broker's responsibilities in finding for the seller a ready, willing, and able buyer. A property management contract establishes the responsibilities of a broker in managing a principal's property. A sales contract is a contract between a buyer and seller for purchase of a property. An escrow contract is an agreement between a buyer, seller, and escrow holder (such as a broker) defining the responsibilities of each.
(Unit Practice) The primary survey line running north and south in any area described by the rectangular survey system is its A) range line. B) township line. C) principal meridian. D) base line.
C) The answer is principal meridian. The principal meridians run north and south in a rectangular survey system, and the base lines run east and west.
(Unit Practice) Which of the following is NOT a category commonly applied in zoning ordinances? A) Industrial B) Residential C) Rental D) Commercial
C) The answer is rental. Zoning ordinances have traditionally classified land use into residential, commercial, industrial, and agricultural and do not include rental as one of the classifications. Rental refers to a type of property use and ownership, a leasehold, rather than a usage of the land.
(Unit Practice) Penelope has made an offer to the seller who has countered and given Penelope 24 hours to accept the counter. In this case the original offer is considered to be A) executory. B) void. C) terminated. D) voidable.
C) The answer is terminated. A counter offer terminates the original offer and creates a new offer. Since there is not a contract the terms are executory. An offer is not a contract and cannot be considered voidable or void.
(Unit Practice) A suit to quiet title refers to A) a mortgagor relinquishing title after foreclosure. B) a title insurance company's search of the title. C) the removal of a cloud on the title by court action. D) the deposit of a title with an escrow agent.
C) The answer is the removal of a cloud on the title by court action. If there is a gap in the ownership chain, then this cloud on the title makes it necessary to establish ownership by court action. This is called a suit to quiet title.
(Unit Practice) Arun and Ben are joint tenants. Ben sells his interest to George. What is the relationship of Arun and George? A) There is no relationship because Ben cannot sell to George. B) They are joint tenants. C) They are tenants in common. D) Arun owns a two-thirds interest and George owns a one-third interest.
C) The answer is they are tenants in common. When joint tenants sell their interest in the jointly held property, the unities of time and title are destroyed. The new owner, George, becomes a tenant in common with Arun.
(Unit Practice) What type of arrangement is established when a broker helps a buyer and a seller with paperwork but does not represent either party? A) Prohibited in all states as a broker must always represent one party B) Dual agency C) A transactional brokerage D) Designated agency
C) The answer is transactional brokerage. When a broker does not represent either party in a transaction and acts as a facilitator or nonagent, the arrangement is known as transactional brokerage and is legal in some states. Dual agency exists when an agent represents both the buyer and the seller in the same transaction. Designated agency exists when a broker acting as a dual agent for both parties in a transaction assigns an individual agent to represent the seller and another agent to represent the buyer in the same real estate transaction; each agent is known as a designated agent.
(Unit Practice) Which of the following terms identifies the physical characteristic of real estate that means every parcel of land is different? A) Indestructibility B) Immobility C) Uniqueness D) Scarcity
C) The answer is uniqueness. Uniqueness is the concept that no two parcels of property are exactly the same or in the same location. An individual parcel has no substitute because each is unique. Immobility means that the geographic location of a parcel of land can never be changed. Indestructibility means that land is durable and cannot be destroyed. Scarcity is an economic characteristic of land, meaning that when the supply of land is limited the price of the land increases.
(Unit Practice) A home valued at $168,500 has just had a 70% mortgage loan placed on it. The interest rate is 5.25%. The monthly payment is $651.32 including principal and interest. What will the principal balance of the mortgage loan be after the next monthly payment is made? A) $117,950.00 B) $117,913.56 C) $117,560.28 D) $117,814.71
D) The answer is $117,814.71. $168,500 property value × 70% = $117,950 mortgage balance; $117,950 mortgage balance × 5.25% interest = $6,192.38 annual interest ÷ 12 months = $516.03 first month's interest; $651.32 - $516.03 = $135.29 principal paid in first month; $117,950 original mortgage balance - $135.29 principal payment = $117,814.71 mortgage balance after first month.
(Unit Practice) An investment property now worth $180,000 was purchased seven years ago for $142,000. At the time of the purchase, the land was valued at $18,000. Using a 39-year life for straight-line depreciation purposes, the present book value of the property is A) $113,071.00. B) $95,071.35. C) $126,000.50. D) $119,743.59.
D) The answer is $119,743.59. The book value of the property is not related to the market value; book value is an accounting technique for getting the tax benefits of paper depreciation. Land does not depreciate in book value. The property (including land and improvements) was purchased for $142,000. Five steps: (1) Find the original book value of the improvements by subtracting the value of the land from the entire purchase price ($142,000 - $18,000 = $124,000). (2) Find the depreciation for one year using a 39-year economic life ($124,000 ÷ 39 = $3,179.49). (3) Find total depreciation over the last 7 years ($3,179.49 × 7 = $22,256.41). (4) Find the present book value of the improvement ($124,000 - $22,256.41 = $101,743.59). (5) Find the present book value of the improvement plus the land ($101,743.59 + $18,000 = $119,743.59).
(Unit Practice) Five years ago, Juanita bought a home for $250,000. Home values in her area have improved, and the current market value of the house has increased by 15%. If Juanita has $95,875 left to pay on her mortgage loan, what is her current equity in her home? A) $154,125 B) $138,712 C) $250,000 D) $191,625
D) The answer is $191,625. The homeowner's equity is the difference between the market value of her property and the debt that encumbers it. Original cost ($250,000) + increase in value ($250,000 × 15% (0.15) = $37,500) = current market value ($287,500) Current market value ($287,500) - mortgage debt ($95,875) = the homeowner's equity ($191,625)
(Unit Practice) If the annual net income from a certain commercial property is $22,000 and the capitalization rate is 8%, what is the value of the property using the income approach? A) $176,000 B) $200,000 C) $183,000 D) $275,000
D) The answer is $275,000. $22,000 net income ÷ 8% cap rate = $275,000 value of property.
(Unit Practice) Assuming that the listing broker and the selling broker in a transaction split their commission equally, what was the sales price of the property if the commission rate was 6.5% and the listing broker received $12,593.50? A) $139,900 B) $193,746 C) $256,200 D) $387,492
D) The answer is $387,492. Two steps: (1) Find the entire commission by doubling listing broker's half (2 × $12,953.50 = $25,907). (2) Find the sales price by dividing the entire commission by the brokerage rate ($25,907 ÷ 6.5% = $387,492).
(Unit Practice) What is the size of a lot that is ¼ of a mile wide by ¼ of a mile long? A) 10 acres B) 120 acres C) 80 acres D) 40 acres
D) The answer is 40 acres. 1,320 ft (¼ (0.25) of 5,280 ft {one mile}) x 1,320 ft = 1,742,400 sq. ft. ÷ 43,560 (sq. ft. in an acre) = 40 acres
(Unit Practice) Which of the following laws requires all advertisements that reference mortgage financing terms to contain certain disclosures? A) Fair Housing Act B) Real Estate Settlement Procedures Act C) Equal Credit Opportunity Act D) Truth in Lending Act
D) The answer is Truth in Lending Act. Truth in Lending Act requires that trigger terms about mortgage financing in any kind of advertising must also include additional disclosures in the advertisement. The Fair Housing Act prohibits discrimination against protected classes in residential real estate advertising and practice. RESPA (Real Estate Settlement Procedures Act) deals with closings and settlement and does not apply to advertisement. The Equal Credit Opportunity Act prohibits lenders and others who grant or arrange credit to consumers from discriminating against protected credit applicants.
(Unit Practice) The Maryland Real Estate Commission has determined that the broker has improperly handled trust monies by using them to pay office expenses and a salesperson's commission. What additional actions, if any, can be imposed by a court of law? A) No actions can be imposed by a court of law B) Imprisonment up to three years C) Additional fines up to $50,000 D) Additional fines and/or imprisonment of no more than one year
D) The answer is additional fines and/or imprisonment of no more than one year. In addition to being reprimanded, suspended, revoked, and fined by action of the Maryland Real Estate Commission, the Brokers Act also provides for imposition by a court of law of fines not to exceed $5,000 and/or imprisonment not to exceed one year for the first offense relating to the improper handling of trust money.
(Unit Practice) A real estate professional who is the agent of the buyer should do which of the following? A) Disclose to the seller that the buyer is a member of a protected class B) Present to the seller only offers that are acceptable C) Disclose to the seller the maximum price the buyer is willing to pay D) Advise the buyer if the listing price of the seller's house is unrealistic
D) The answer is advise the buyer if the listing price of the seller's house is unrealistic. As part of the fiduciary duties owed a principal, an agent for the buyer should disclose to the buyer if the property is overpriced.
(Unit Practice) Under the terms of the Equal Credit Opportunity Act (ECOA), a lender may consider all of the following factors when deciding whether to grant a borrower a mortgage loan EXCEPT A) creditworthiness of the borrower. B) amount of the borrower's income. C) ability of the borrower to make the payments. D) age of the borrower.
D) The answer is age of the borrower. ECOA prohibits lenders from discriminating against credit applicants on the basis of several factors, including age, race, sex, and marital status. A lender may consider a borrower's income, creditworthiness, and ability to make payments in determining whether or not to make a loan.
(Unit Practice) An owner divides a parcel into several lots, one of which is completely surrounded by other lots and has no street access. Which of the following is TRUE? A) The municipality must construct a street to create access. B) The owner must create an easement by condemnation to provide access. C) An easement by prescription should be granted. D) An easement by necessity should be created for the landlocked parcel.
D) The answer is an easement by necessity should be created for the landlocked parcel. An easement by necessity is created by court order based on the principle that owners have the right to enter and exit their land.
(Unit Practice) A tax lien on the property can hinder the sale of a property because it is A) an encroachment. B) an appurtenance that does not affect the title. C) a monetary charge that the purchaser must satisfy. D) an encumbrance.
D) The answer is an encumbrance. An encumbrance is a claim, charge, or liability that attaches to real estate. It is a right or interest held by someone other than the fee owner of the property that affects title to real estate.
(Unit Practice) The rights of ownership of real property include all of the following EXCEPT A) exclusion. B) disposition. C) control. D) compatibility.
D) The answer is compatibility. The bundle of legal rights includes possession, control, enjoyment, exclusion, and deposition, but not compatibility.
(Unit Practice) Which is required for ALL Maryland real estate licensees to renew their licenses? A) Completion of at least 6 hours of continuing education on changes in federal, state, and local laws B) Completion of at least 3 hours of continuing education in fair housing C) Completion of at least 1.5 hours of continuing education in ethics D) Completion of a total of at least 15 hours of approved continuing education courses
D) The answer is completion of a total of at least 15 hours of approved continuing education courses. Biennial renewal for a licensee requires a total of 15 clock hours of approved courses. Among these are at least 3 hours of ethics, 3 hours of agency, 3 hours of legislative update, and—except for exclusively commercial licensees—1.5 hours of fair housing. In place of fair housing, commercial licensees may take 1.5 hours of class presenting the Americans with Disabilities Act.
(Unit Practice) What is the principal difference between an estate for years and an estate from period to period? A) An estate from period to period must be in writing. B) An estate for years is a life estate. C) An estate for years cannot be terminated. D) An estate from period to period has no expiration date.
D) The answer is estate from period to period has no expiration date. An estate from period to period, or periodic tenancy, does not have a specific expiration date as it automatically renews until notice is given by the tenant or landlord. An estate (tenancy) for years has specific beginning and ending dates. Neither estate is a life estate. Each can be terminated. Both an estate for years and an estate from period to period must be in writing to be enforceable.
(Unit Practice) The Maryland Real Estate Commission may summarily order the suspension of a licensee who A) properly displays licenses on the walls of the broker's office. B) is convicted of driving under the influence of alcohol. C) immediately makes records and books regarding trust accounts available to the Commission. D) fails to account promptly for any funds held in trust.
D) The answer is fails to account promptly for any funds held in trust. The Maryland Real Estate Commission may summarily order the suspension of a licensee who fails to account promptly for any funds held in trust.
(Unit Practice) In Maryland, individuals who perform real estate activities while their licenses are on inactive status are A) permitted to do so as long as their previous brokers are kept informed. B) saving money because they don't have to pay renewal fees. C) guilty of a felony and may be imprisoned up to two years. D) guilty of a misdemeanor punishable by fine and/or imprisonment.
D) The answer is guilty of a misdemeanor punishable by fine and/or imprisonment. In Maryland, individuals who perform real estate activities while their licenses are on inactive status are guilty of a misdemeanor punishable by fine and/or imprisonment.
(Unit Practice) Which approach to estimating value would be most useful to an appraiser asked to estimate the value of an existing strip shopping center? A) Sales comparison approach B) Gross rent multiplier method C) Cost approach D) Income approach
D) The answer is income approach. The income approach will have the most weight in the analysis of income-producing property. The sales comparison approach will have the most weight in the analysis of single-family residential property. The cost approach may be used as one approach to appraising income property, but the income approach will be given the most weight by the appraiser. The gross rent multiplier method is used in the income approach but to determine value of residential income property.
(Unit Practice) Which of the following statements about rental security deposits is FALSE? A) The portion of the deposit not withheld must be returned to the tenant within 45 days of end of occupancy together with an accounting of how any withheld portion was spent. B) The landlord can credit the tenant with as low as 1.5% per annum simple interest on these funds at the end of the lease. C) Tenants may recover three times the amount of security deposit improperly withheld by the landlord, plus reasonable attorney fees. D) Interest on security deposits is computed and compounded at six-month intervals.
D) The answer is interest on security deposits is computed and compounded at six-month intervals. The interest is computed in six-month intervals but is not compounded. The other choices are true.
(Unit Practice) In a purchase agreement, the buyer and seller agreed to liquidated damages as a remedy for default. If the buyer does default, the seller A) sues the buyer to buy the property. B) sues the buyer and keeps the earnest money. C) needs to notify the buyer of the intent to sue for liquidated damages. D) keeps only the buyer's earnest money.
D) The answer is keeps only the buyer's earnest money. Liquidated damages as a remedy allows the seller to keep the earnest money and nothing more. Specific performance is a lawsuit to have the buyer perform the terms of the contract.
(Unit Practice) In Maryland, once resale purchasers of a condominium receive the "condo docs," they A) may rescind the contract within a week if they have a valid reason. B) are obligated to continue with the purchase. C) have no recourse unless the new information changes their financial obligations that result in the lender denying them a loan. D) may rescind the contract within seven days without stating any reason."
D) The answer is may rescind the contract within seven days without stating any reason. Once resale purchasers of a condominium unit receive the "condo docs," they have seven days to give written notice rescinding their contract to purchase without stating any reason; this right is waived if they proceed to closing before the seven-day period ends.
(Unit Practice) The uniqueness of land and its inability to be substituted is called A) permanence of investment. B) scarcity. C) nonheterogenity. D) nonhomogenity.
D) The answer is nonhomogenity. Nonhomogenity is another term for uniqueness because two parcels of land are never exactly alike.
(Unit Practice) Which statement about teams is FALSE? A) The team leader may be a salesperson. B) Team advertising must show the name of at least one licensee team member. C) Members select their own team leader. D) Persons licensed under different brokers may be members of one team.
D) The answer is persons licensed under different brokers may be members of one team. Team members exercising licensee status must be licensed under the broker of the firm and work out of the office where each team member's license certificate is displayed. It is conceivable, but ill-advised, that a licensee whose only license is with another firm could be a team member. Such a person could only serve as an unlicensed personal assistant. The other choices are true.
(Unit Practice) Fair housing laws allow exceptions for all of the following EXCEPT A) private clubs. B) religious organizations. C) retirement communities. D) racial discrimination.
D) The answer is racial discrimination. The case of Jones v. Mayer in 1968 upheld the Civil Rights Act of 1866 and prohibits racial discrimination without exception. Private clubs, religious organizations, and retirement communities are not exempt from fair housing laws' prohibitions against housing discrimination based on race.
(Unit Practice) An owner conveys a life estate to her grandson George and stipulates that on her death the estate will pass to her son-in-law Tomas. Tomas has a(n) A) legal life estate. B) reversionary interest. C) estate for years. D) remainder interest.
D) The answer is remainder interest. The owner's death will end the life estate conveyed to her grandson, which will then mean the holder of the remainder interest, the son-in-law, will have fee simple absolute ownership of the property. An estate for years is a leasehold estate that continues for any definite period of time. A legal life estate is a freehold estate created out of a provision.
(Unit Practice) A man's house has been listed for sale for more than one year and he is very anxious to move into a retirement community. A real estate professional, who is a subagent of the seller, tells a prospective buyer to make a low offer because she is sure that the seller will accept it. Regarding the real estate professional's conduct, which of the following is FALSE? A) She should not assume that an anxious seller will accept a lower offer. B) She violated her fiduciary duty to the seller. C) Her conduct implies she is representing the buyer. D) She acted appropriately to sell the seller's property.
D) The answer is she acted appropriately to sell the seller's property. The real estate professional's conduct is not appropriate because she violated her fiduciary duty to the seller (a subagent owes the same fiduciary duties to a principal as an agent), she may have implied she is representing the buyer, and she made assumptions that may or may not be true regarding the seller.
(Unit Practice) Tony's lease has expired, but he has not vacated the premises or negotiated a renewal lease. The landlord has declared that Tony is not to remain in the building. This situation is an example of A) an estate for years. B) an estate from period to period. C) tenancy at will. D) tenancy at sufferance.
D) The answer is tenancy at sufferance. Tenancy (estate) at sufferance occurs when a tenant who lawfully possessed real property continues in possession of the premises without the landlord's consent after the lease rights expire, typically from an estate for years. An estate from period to period automatically renews unless notice is given. A tenancy at will permits a tenant to possess property with the landlord's consent for an unspecified term. An estate for years is a leasehold estate that continues for a definite period, whether that period be days, weeks, months, or years and has a definite expiration date.
(Unit Practice) In a limited partnership, A) all the partners participate in running the business. B) investors may participate with only a small amount of capital but with unlimited liability. C) the number of investors is limited to 10. D) the general partners run the business.
D) The answer is the general partners run the business. In a limited partnership, the limited partners are not legally permitted to participate and can individually be held liable for losses only to the extent of their investment.