National Real Estate Licensure
Timeshare use A timeshare use gives the purchaser the right to possess the property at given times for a given duration, but it doesn't convey ownership. This is contrasted with a timeshare estate, which does convey ownership.
A ______ gives the purchaser the right to possess the property at given times for a given duration but doesn't convey ownership. Cooperative membership Condominium ownership Timeshare use Timeshare estate
$2,333.33 $400,000 x 0.07 = $28,000; then $28,000 ÷ 12 = $2,333.33
A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest? $3,100 $933.33 $2,333.33 $28,000
Sue the seller Once closing has occurred, the buyer can sue the seller if the buyer discovers the seller wasn't honest about the property's condition.
A buyer who discovers after closing that a seller wasn't honest about the property condition on the required disclosures can _____. Get a refund of the earnest money Sue the seller Cancel the agreement and locate another property File a claim with the state commission
Pay the existing loan off The title search, closing statement preparation, and title insurance purchase must all be completed prior to closing. After closing, the closing agent makes arrangements to pay off the seller's existing loan with the proceeds from the buyer. "We're recorded and funded" is music to a licensee's ears.
A closing agent has several duties to perform both before and after the closing. Which of the following is a task the closing agent must complete after the closing? Perform a title search Pay the existing loan off Prepare a closing statement Obtain title insurance
Effective 'Choose Your Neighbor' letters can be useful as one part of a broad marketing campaign, as long as they make the property available to all potential purchasers, not just a select group.
A complete marketing campaign that includes the use of 'Choose Your Neighbor' letters in conjunction with an MLS listing, for sale signs, and advertisements in several newspapers is _____. Illegal Overkill Effective Unethical
Lender The lender has the mortgage on the property, so the lender is the mortgagee.
A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what is the mortgagee? Borrower Property Loan Lender
Credited $1,207 The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days = $1,206.84. That's $1,207 if rounded to the nearest whole dollar.
A real estate transaction has a closing date of May 20. The seller, who's responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement. Debited $1,207 Credited $1,207 Debited $742 Credited $742
Home Mortgage Disclosure Act The Home Mortgage Disclosure Act requires many financial institutions to publicly disclose information about mortgages, allowing public officials to make informed policy decisions and revealing potentially discriminatory lending patterns.
About 50% of the borrowers in Neighborhood One are Hispanic, while only 4% in Neighborhood Two are Hispanic. The median home price in both neighborhoods is the same. However, statistics show that there is a significantly greater percentage of minority and low-income borrows who were denied financing for loans on properties in Neighborhood Two and were offered lower rates to live in Neighborhood One. What act is intended to prevent this type of potentially discriminatory lending pattern? Equal Credit Opportunity Act Community Credit Act Consumer Credit Protection Act Home Mortgage Disclosure Act
The principal broker becomes incapacitated. Broker incapacitation can legally terminate an agency agreement. If an agent is incapacitated, the broker can assign a new agent to the client.
Agency may be legally terminated in which of the following ways? The client changes financing. The client changes plans. The agent finds a better client. The principal broker becomes incapacitated.
$293.70 The total transfer tax is $587.40 ($178,000 x .0033), so they each pay $293.70 ($587.40 ÷ 2).
Alexandra sells her house to Clark for $178,000. They negotiate to split the transfer tax, which has a rate of $0.33 per $100. What do they each pay to cover the transfer tax? $587.40 $293.70 $29.37 $58.74
A home equity loan A home equity loan is based on the amount of equity the homeowners have in their home. These funds are received in one lump sum and are frequently used for large expenses, such as home renovations.
April's mother is getting older, lives alone, and needs care. April's house is too small for both of them. She has a solid amount of equity in the home but isn't in a position to move. Instead, she decides to take out a loan to build an 800-square-foot addition onto the existing home for her mom. What type of loan might April likely consider to finance the addition? An amortized loan A balloon loan A bridge loan A home equity loan
Seisin The covenant of seisin guarantees that the grantor owns the property that appears in the deed. Because the sale of property to Ari's neighbor was never recorded, his deed still shows that he owns the entire parcel.
Ari owned an acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction. There's no record of the sale or change of ownership. A developer has offered Ari several million dollars for the entire acreage, and Ari eagerly accepts the offer. What covenant is Ari in danger of violating? Seisin Against encumbrances Quiet enjoyment Warranty
The grantor The grantor must state before a public official that the deed signing is voluntary.
As part of an acknowledgement who must state the deed signing is voluntary before a public official? The grantor The grantee The Notary The County Clerk
Local It would be cumbersome to exert local control and planning from a state or federal level.
At what level are budgeting, site plan review, and building codes controlled? Federal and state State Federal Local
The chandelier in the foyer The chimenea, area rug, and banker's lamps are all free-standing and easily removed. The chandelier, however, is not a free-standing light fixture and should be considered real property.
Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home? -The chimenea on the back patio -The area rug in the dining room -The banker's lamps in the den -The chandelier in the foyer
Bobbi Jo disclosed the down payment assistance to the lender. Borrowers who use a down payment assistance program must disclose to the lender where the money came from.
Bobbi Jo wants to purchase a house for $350,000. She's pre-approved for $300,000, but wants to buy a $350,000 house and doesn't have $50,000 in cash. A down payment assistance program approves her for a second mortgage for $40,000, and the sale closes two weeks later. What made this a legal second mortgage, and not fraud? Bobbi Jo signed an affidavit stating that she had independently secured the full $50,000. Bobbi Jo referred to it as a gift, not a silent second mortgage. Bobbi Jo disclosed the down payment assistance to the lender. The lender provided the down payment assistance.
Reversion Sellers may be liable for capital gains tax upon the reversion (sale) of property they own.
Capital gains fall into which stage of the property ownership life cycle? -Capital gains are not part of the property ownership life cycle. -Ownership -Reversion -Acquisition
If the subject property has a valuable feature lacking in the comparable property, she adds this value to the comparable property's sales price. Adjustments are made to the comparable property's sales price to account for differences between the comparable and the subject property. Value is added when the feature is missing in the comparable, and deducted when the feature is missing in the subject property.
Carol is performing a market analysis, and is working with three comparable properties to her subject property. How does she account for differences between the subject property and comparable? -If the subject property has a valuable feature lacking in the comparable property, she subtracts this value from the comparable property's sales price. -If the subject property has a valuable feature lacking in the comparable property, she adds this value to the comparable property's sales price. -If the comparable has a valuable feature lacking in the subject property, she deducts this value from the subject property. -If the comparable has a valuable feature lacking in the subject property, she adds this value to the subject property.
Campground membership A campground membership gives the purchaser the right to use all of the campground facilities, such as water or electric hookups, restrooms, and recreational facilities like pools or playgrounds. Members may use the facilities at any time during the year.
Clint was looking for alternatives to the traditional vacation condo rental for his family. He purchased the right to use a given set of facilities at any point throughout the year. What did Clint purchase? Campground membership Condo estate Timeshare use Timeshare estate
Connor, as grantor The grantor (usually the seller) conveys title. The grantee (buyer) accepts and acknowledges receipt of title.
Connor and Duke were seller and buyer of Connor's property, respectively. Who conveys the title? -The title clerk for the county in which the property is located -Duke, as grantor -Connor, as grantee -Connor, as grantor
Higher interest rates
During periods of inflation, what are you likely to see? Higher interest rates More buyers No buyers Lower interest rates
She must obtain the disclosures, provide them to Luis, and review them with him. The licensee representing the buyer must obtain seller disclosures, provide them to and review them with the buyer, and encourage the buyer to obtain a home inspection.
Eleanor is working as a buyer's agent for Luis in a state without full disclosure requirements. What is her responsibility relative to property disclosures? -She must obtain the disclosures, provide them to Luis, and review them with him. -She must remind the seller to complete the disclosures and send them to Luis. -She must verify all of the noted conditions with third parties. -She must line up a home inspector to review the disclosure forms.
Timeshare use
Ellen and Isaac have a timeshare near the Grand Canyon. They'll be able to use it for two weeks every September, for the next eight years. What type of timeshare is this? Timeshare use Periodic estate Timeshare estate Fee simple timeshare
Time is of the essence Timeliness is definitely part of performance. The phrase "time is of the essence" means that the parties will proceed according to the date(s) specified in the contract. Reasonable time is assumed if a specific performance date isn't mentioned.
Gail was supposed to close on her new home by the end of May, but she kept asking the sellers if they could push the closing back. Soon the summer was over and she still hadn't closed. Gail was guilty of not adhering to which aspect of the contract? Time is of the essence Reasonable time Novation Assignment
Lot and block References to plats and plat maps are used in the lot and block survey system.
Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, Page 14, at the county courthouse. What type of legal description is this? Metes and bounds Rectangular government survey Lot and block Monument and benchmark
The covenant of the right to convey The covenant of the right to convey requires that the grantor have legal capacity to convey, and Henrietta is a minor.
Henrietta is 17 years old. She wants to sell the property given to her by her grandmother. Which covenant provided by the general warranty deed may prevent her from doing so? The covenant of warranty The covenant of further assurances The covenant of seisin The covenant of the right to convey
$265,000 Subtract closing costs from cashier's check amount to find down payment balance ($34,450 - $7,950 = $26,500), which equals the earnest money (total down payment is 20%). Divide earnest money by 10% to find purchase price ($26,500 ÷ .1 = $265,000).
Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. He brings to closing a cashier's check for $34,450 comprising the balance of his 20% down payment and $7,950 in closing costs. What's the condo's purchase price in whole dollars? $265,000 $344,500 $132,500 $88,333
"Six months" The typical option period is often six months. Option periods cannot be "forever," or even extended indefinitely. A definite period of time should be stated.
Hernando, a real estate attorney, is preparing an option contract for his client, Wilma. Hernando asks Wilma what she and the seller have agreed upon for the option period. Wilma said the seller was leaving that up to her, and she wanted to get Hernando's opinion. What should Hernando put into the contract for the option period? "Indefinite" "Six months" "Negotiable" "N/A"
Functional obsolescence Burt's investment is experiencing functional obsolescence, a form of depreciation or loss in value caused by defects in design, such as an atypical floor plan.
Homes in a new home development have been built with a floor plan that doesn't appeal to today's buyers. In a cost approach valuation of the houses, what sort of depreciation will the appraiser apply? Functional obsolescence External depreciation Physical depreciation None. Depreciation doesn't apply to new buildings.
Quiet enjoyment An example of constructive eviction would be turning the property's water supply off.
If a landlord removes the tenant's right of ______, the tenant can claim constructive eviction and vacate the property with no further financial responsibility to the landlord. Ownership Control Quiet enjoyment Acceptance
It's generally much easier for a lender to foreclose on a property. In a title theory state, the lender holds the legal title to the property (usually through a third-party trustee) until the loan is paid off. This makes it easier for the lender to foreclose.
In title theory states, which of the following is a true statement? -The mortgage creates a lien against the property used as security for the loan. -It's generally much easier for a lender to foreclose on a property. -A promissory note creates a lien against the property used as security for the loan. -The lien makes non-judicial foreclosure typical.
Assignment Under an assignment, the vacating tenant is released from his obligation under the lease, and a new tenant takes over the lease agreement. However, if the new tenant doesn't pay, the vacating tenant may be held responsible for the rent.
In which of the following situations does a new tenant take the place of a departing tenant, thereby becoming responsible for the lease, but the departing tenant may remain liable? Sublease Actual eviction Assignment Constructive eviction
Seven
Insurance claims might not appear on a CLUE report for a property if the claims were made more than ________ years ago. 10 Nine Seven Four
The smaller number Lenders use the lesser of the sales price and appraised value.
Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio? -A weighted average based on the sales price, appraisal amount, and recent sales -The smaller number -A middle point between the two numbers -The larger number, as a buyer has already been found
Zero years (personal residences cannot be depreciated) Depreciation is limited to investment properties—you can't depreciate a personal residence or vacation home.
Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property? Zero years (personal residences cannot be depreciated) 39 years Indefinitely 27.5 years
A new Closing Disclosure must be issued, so the closing date must be moved back. Any interest rate change of more than 1/8 of a percent requires a new Closing Disclosure, triggering a new three-day waiting period.
Jerrica is set to close on the property she's buying on Friday. Because of other delays in the closing date, Jerrica's interest rate as of the day of closing will increase by 1/4 of a percent. What impact does this have on the closing? -Jerrica will not be able to close until she re-applies for her loan. -The closing date will remain the same, but Jerrica will need to bring additional funds to the closing. -A new Closing Disclosure must be issued, so the closing date must be moved back. -A new Loan Estimate must be issued, so the closing date must be moved back.
10 years Structural damage can take a while to appear, so homeowners will want to file a claim if it's a decade or less.
John and Amy purchased a builder's home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage? One year Three years Five years 10 years
A lot that is adjacent to or partially on wetlands There are certain building restrictions in and around wetlands, so they should probably avoid properties located next to wetlands if they want to build a studio.
Jon and Talia are artists who are looking for a home with a backyard that is big enough for them to build a studio. Which of the following properties might they want to stay away from? -A lot that is adjacent to or partially on wetlands -A property that is 1,200 feet from an interstate highway -A lot with a gentle slope -A treed lot
Yes, a living trust would avoid probate. A living trust is created during the trustor's lifetime, and so the beneficiary is already using it when the trustor dies. This is how it escapes the probate process.
Julian and Clara want to leave their real estate holdings to their children. If at all possible, they'd like those holdings to avoid the probate process after they're deceased. Their attorney recommends a land trust. Is there a type of trust they could establish that would avoid probate? No, all trusts go through probate. Yes, a living trust would avoid probate. Yes, a testamentary trust would avoid probate. Yes, a C trust would avoid probate.
No, because the purchase was not a "like-kind" property.
Julius sold one of his investment properties, and with the proceeds of the sale invested in some equipment for one of his other businesses. Can he defer the capital gains taxes on the sale of the investment property? No, because capital gains are always due in the same tax year as the sale. No, because the purchase was not a "like-kind" property. Yes, because his accountant applied for a waiver. Yes, because he reinvested the money.
The CD and LE aren't required in a seller-financed transaction. In a seller-financed transaction, the LE and CD aren't required. Some other form of statement may be prepared to show the buyer and the seller their respective closing figures.
Katherine is purchasing a second home as an investment/vacation property. She has a large down payment, and the seller is financing the rest of the purchase. Which of these statements is true? -The seller is required to provide the same disclosure forms to Katherine as a standard lender would provide. -The CD and LE aren't required in a seller-financed transaction. -The seller will provide the LE and CD to Katherine but has a longer timeframe to do so than a traditional lender would have. -The CFPB provides forms similar to the LE and CD for seller/financers to use.
$255,000 Transfer tax is calculated based on the purchase/sales price ($255,000).
Katherine purchased a property for $255,000, borrowing $242,250. The assessed value of the property is $249,700. The property appraisal came in at $257,000. Which of these amounts is used in calculating the transfer tax? $257,000 $249,700 $242,500 $255,000
The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz. The doctrine of estoppel prohibits an individual from making an assertion that's in opposition to actions or to a previous statement. Kennie Mae acted as if she was Buzz's agent, so she can't later disavow that behavior.
Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here? -Law of agency, because Kennie Mae defined her agency relationship with Buzz through the tasks she performed. -The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz. -Agency after the fact, because Kennie Mae continued to perform tasks for Buzz through the closing date. -The ratification doctrine states that Kennie Mae ratified her relationship with Buzz by signing the closing paperwork.
Kevin signed a listing agreement with you. Agency is created through either an express or an implied agency agreement. Neither compensation nor ownership create an agency relationship. You have a signed agency agreement with Kevin; that agreement creates the agency relationship.
Kevin listed his house with you but isn't offering a cooperating agent's commission. Ji-eun represents the buyer, Marta, and Marta's parents, Jean and Tom, are paying Ji-eun's commission. On which of these factors is your agency relationship based? -Kevin owns the property you've listed. -Kevin is paying your commission. -Marta's parents are paying the buyer's agent commission. -Kevin signed a listing agreement with you.
Dominant The dominant estate (or tenement) is the one that receives the benefit from the other owner, also called the servient estate.
Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would be, they found he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. Kurt owns the ________ estate or tenement. Gross Dominant Prescriptive Servient
$54,150 Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).
Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment? $57,000 $35,025 $54,150 $62,100
They don't require a general partner. LLCs/LLPs don't require general partners who assume liability jointly and separately.
Limited liability companies and limited liability partnerships are favorable forms of business because ______. -They're considered temporary and can be quickly dissolved. -Owners of the LLC or LLP are personally liable for LLC/LLP obligations. -They don't require a general partner. -They aren't taxed as partnerships.
Subleasing Subleasing requires the landlord's permission, but the original tenant still pays the landlord as the lease specifies.
Lorenzo just received a prestigious fellowship to study abroad for a year! However, he still has six months left on his one-year apartment lease. His landlord has given him permission to draw up a new agreement with his sister Maggie, whereby Maggie will live in the apartment, pay rent to Lorenzo, and then Lorenzo will pay the landlord. This is an example of ________. Transfer Assignment Assimilation Subleasing
FHA Based on the minimum down payment amount of 3.5% and the fact that she's paying MIP, Lydia has an FHA loan.
Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay a Mortgage Insurance Premium (MIP). What type of loan does Lydia have? VA FHA VA, FHA, or Conventional Conventional
Wrap-around loan This situation describes a wrap-around loan: The seller's mortgage remains in place, but the seller is receiving payments from the new buyer and is therefore financing the purchase.
Manuel is selling his home to Selena. He has an existing loan that he'll continue to make payments on, and he's extending credit to Selena for the balance of the purchase price. She will make monthly payments to him. What type of financing are the parties using in this transaction? Home equity loan Refinance Loan amalgamation Wrap-around loan
Neighborhood website School information isn't often included on the list of things a seller must disclose, but it can usually be found on a neighborhood website, or sometimes in the MLS.
Millie and Gary are searching for a home in a great school district. If the public school isn't highly rated, then options such as charter schools and private schools should be plentiful. Some states don't include school district information on the seller disclosure form, so how might they learn about school options? Neighborhood website County records office Deed HOA documentation
Investment group Many investment groups lend specifically to other investors who want to avoid conventional financing.
Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some additional financing. To which type of lending institution might he prefer to go? A savings and loan A credit union A commercial bank Investment group
Undue influence Undue influence occurs when persuasion overcomes another person's free will and judgment. Duress occurs when a threat is involved.
Regarding the need for consent for a contract to be valid, which of the following exists when an act of persuasion overcomes another person's free will and judgment? Innocent misrepresentation Undue influence Fraud Duress
If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed. Housing providers may inquire as to the nature of the disability if it's not apparent, and they must permit assistance animals for tenants with documented disabilities without charging an additional pet deposit.
Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true? -The landlord is not obligated to consider the request unless the tenant can produce either the original or a certified true copy of the animal's service certification. -The landlord must consider the request but may require an additional "pet" security deposit. -If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed. -If the disability is not obvious, the tenant must provide the landlord with full medical records to support the request.
Number and type of electrical breakers Electrical safety standards are typically a component of building codes in almost any location.
Robert is the general contractor for a home being constructed in a new development. The foundation has been poured, and he's working with the homeowners to make some decisions that weren't identified in the blueprints he's working from. Which of the following details will be guided by local building codes? Placement of gas range in the kitchen Material used for shingles Number and type of electrical breakers Number and type of windows per square foot
180
Samuel wants to do a 1031 exchange. He sold his investment property and has identified the property he'd like to buy next. Within how many days must he close on this property in order for it to qualify as part of the exchange? 30 60 45 180
Deed condition A deed condition or restriction grants ownership with a contingency. If the condition is violated, the current owner may lose the property.
Shemar owns a starter home a few miles outside the city center, and he wants to deed it to his grandson, Tyler. According to the paperwork Shemar had drawn up, Tyler will own the property as long as he continues to pay the property taxes on time. After the second late property tax payment, ownership reverts to Shemar. What did Shemar place on the deed? Deed condition Deed limitation Deed covenant CC&Rs
His heirs, as described in his will or the state law of descent, will get the property.
Simon recently passed away. He owned title to his property in severalty, as a fee simple absolute estate. What will happen to his property? -The property will have no owner and must be sold at auction. -His property will transfer to a colleague. -The property will revert to a remainder man. -His heirs, as described in his will or the state law of descent, will get the property.
Fee simple determinable With fee simple determinable, the property holder owns the property subject to a condition. If the condition is breached, then the property will go back to the original owner.
The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this? -Fee simple subject to a condition subsequent -Fee simple determinable -Fee simple defendable -Fee simple absolute
Any ad that makes a health or safety claim or any claim that's difficult for the consumer to evaluate The FTC is concerned with all ad claims, but it's most concerned by any ad that makes a health or safety claim or any claim that is difficult for the consumer to evaluate.
The Federal Trade Commission is concerned with all ad claims, but is most likely to be most concerned with ______. Any ad that makes a health or safety claim or any claim that's difficult for the consumer to evaluate Any exaggerations of a property's view Any ad likely to mislead consumers acting reasonably under the circumstances Any ad that is demonstrably false
Taking Taking occurs when private property is regulated by a government, to the detriment of the landowner.
The Johnsons have owned a small restaurant for more than 20 years. They're open for lunch and dinner six days a week, and 80% of their weekday revenue comes from the happy hour drink and appetizer specials they offer. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____. Condemnation Escheat Eminent domain Taking
Executory
The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. What type of contract do the Nettles and the Briars have? Unilateral Executory Voidable Executed
The prorated property taxes that they paid at closing Depreciation basis is composed of the sales price plus any acquisition costs and capital improvements. The loan origination fee is an acquisition cost, and the electrical system upgrades are capital improvements.
The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegel's depreciation basis calculations? The price that they paid for the property, minus any land costs The loan origination and lender fees that they paid at closing The prorated property taxes that they paid at closing The cost of the electrical system upgrades they did after purchase
To protect themselves from any claims after closing. Home warranties protect sellers from any claims after closing if appliances or systems need to be replaced.
The benefits of a home warranty for buyers are clear. Why might sellers want to offer a home warranty to buyers? To allow the buyer to customize certain items. To protect themselves from any claims after closing. To keep from having to buy new appliances before putting the home on the market. To reassure the buyers about the property's condition.
Basis Basis is the cost of a property and includes the sales price, acquisition costs, and capital improvement costs (such as renovations or additions).
The sales price, acquisition costs, and capital improvement costs (such as renovations or additions) of a property combine to make up what? Debt coverage Appraisal value Market value Basis
Method of annexation
Tim and Tina Wells bought a home with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year. When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. They expected these plantings to be considered part of the real property because of the ________. -Adaptation to the land -Agreement of the parties -Intention in placing the item -Method of annexation
Conditions of sale The elements appraisers consider in the sales 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.
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority? Location Market conditions Conditions of sale Physical characteristics
The civil court system Covenants are enforced through the court system if an agreement can't be otherwise reached.
Tom and Martha live in a neighborhood where lawn ornaments are prohibited. They want to put up a nativity scene at Christmas and argue that the covenant doesn't apply to temporary decorations but only to permanent ones. Their homeowner's association disagrees. Which entity enforces subdivision covenants? The municipal code enforcement agency The civil court system The homeowners association The original developer of the neighborhood
Sandoval will pay the upfront cleanup costs, but then try to collect Tryon's half once it is out of Chapter 11. In joint and several liability, each of the responsible parties is personally responsible for the total damages. If only one of the responsible parties is able to pay the damages, that owner must pay the total and then try collect later.
Tryon Corp. and Sandoval, Inc. were joint owners of the former Sandy Glass manufacturing facility. An environmental assessment found that the two companies share joint and several liability for a hazardous materials cleanup. Tryon is currently in Chapter 11 reorganization and has no assets available to pay cleanup costs. Sandoval has strong company financials. What is Sandoval's likely course of action? -Sandoval will pay the upfront cleanup costs, but then try to collect Tryon's half once it is out of Chapter 11. -Sandoval will apply to the Superfund for all of the cleanup costs since it isn't solely responsible. -Sandoval will pay half and will apply for EPA funds to pay the other half. -Sandoval will have to pay the entire cleanup cost, with no hope for reimbursement.
$31,743.58 Straight-line depreciation for a commercial building means that you should divide the building's basis ($619,000) by 39 years. The yearly depreciation is $15,871.79, and you'd multiply this by two to get the two-year depreciation total.
Two years ago, Amelia purchased a commercial building for $619,000. It was in great shape, so she didn't need to make any renovations. She will use straight-line depreciation to determine the amount of depreciation she can take each year. What is the total amount of depreciation Amelia has accounted for including last year and this year? Can't be determined with the information given. $31,743.58 $15,871.79 $7,935.90
Community Reinvestment Act The Community Reinvestment Act requires lenders to meet the needs of their communities by investing in development and rehabilitation efforts including those that enable low and moderate income neighborhoods meet the needs of the community.
Tyler is a developer who renovates a long-abandoned warehouse in a low-income neighborhood into a community center, complete with space for after-school programs, a daycare, and a gym. Tyler is able to complete the renovation with a loan funded by a local bank. Which act requires financial institutions to make credit available for this type of development? Equal Credit Opportunity Act Community Reinvestment Act Consumer Credit Protection Act Home Mortgage Discrimination Act
It allows investors to defer capital gains taxes when selling a property, provided they buy another property.
What advantage does the 1031 tax-deferred exchange offer? -It allows investors to defer capital gains taxes when selling a property, provided they buy another property. -It allows an investor to avoid ever paying taxes from gains realized on their investments. -It provides a tax shelter for non-real estate investments. -It offsets capital gains for homeowners who have lived in the home for at least two years.
The cost of public services divided by the assessment for the property Property taxes in a mortgage payment are the cost of public services divided by the assessment for the property.
What are property taxes in a mortgage payment? -The cost of public services divided by the assessment for the property -The cost of the local community budget divided by the total number of homes in the area -The cost of the property divided by the local population -Taxes have no real purpose in a mortgage payment, except to fatten government coffers
Riparian Riparian water rights may apply to one of two sub-classifications: navigable or non-navigable waterways.
What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways? Littoral Riparian Groundwater The doctrine of appropriation
Township lines and range lines The boundaries of townships are township lines, which run parallel to baselines meridian, and range lines, which run parallel to principal meridians.
What forms the boundaries of a township? Baselines and township lines Township lines and range lines Tiers and range lines Principal meridians and baselines
A facility where unrelated adults with disabilities live
What's a group home? -A home that's grouped closely to other dwellings for increased density -Any multi-family dwelling -A facility where unrelated adults with disabilities live -An institution, such as a prison or mental health facility
Property taxes Prepaid items—such as prepaid taxes—would be a seller credit and buyer debit. Taxes owed but not yet paid wouldn't be prepaid items.
What's a typical prepaid item that will go into a seller's credit column and a buyer's debit column on a closing statement? Loan fees Recording fees Property taxes Broker fees
The earth's surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects Land is defined as the earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects.
What's the best definition of land? -The earth's surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects -Real estate, plus all of the interests, benefits, and rights included in ownership -Land, plus all things permanently attached to it, naturally or artificially -Everything that's not real property
Title representatives and attorneys who perform title searches look for documents that are publicly recorded. During a title search, title company representatives look specifically for items that are publicly recorded, and the schedule of exceptions will exclude items that aren't recorded.
What's the relationship between the title search, title insurance policy, and document recording? -Title representatives and attorneys who perform title searches look for documents that are publicly recorded. -Title insurance policies don't cover publicly recorded events. -Title insurance policies must be publicly recorded to be legal. -The title insurance policy schedule of exceptions will include anything that's publicly recorded.
Redlining When lenders determine where they will lend based on a neighborhood's racial or other protected class status, it's redlining, and it's illegal.
What's the term for a lender refusing to lend in a specific area, often based on the area's minority make-up? Gerrymandering Steering Redlining Blockbusting
Covenants Fence height, additional structures, and architectural design typically would be categorized under covenants (HOA restrictions are typically set up as covenants).
When referring to private land use restrictions, fence height, additional structures, and architectural design are generally categorized under ______. -Contingencies -Covenants -Conditions -Codes
Home Mortgage Disclosure Act
Which federal lending act requires financial institutions to fulfill their obligations to serve the housing needs of the communities and neighborhoods in which they're located? -Home Mortgage Disclosure Act -Consumer Credit Protection Act -Community Credit Act -Equal Credit Opportunity Act
Planning board
Which local land use group has the dual focus of livability and quality of life? Master commission Planning board Zoning board of appeals HOA
It doesn't cover all situations encountered in real estate. Errors and omissions (E&O) insurance is one way to reduce risk, although it doesn't cover all situations.
Which of the following is a key fact to remember about E&O insurance? -It's not considered a risk prevention measure. -All real estate professionals (licensed and unlicensed) must carry insurance. -It doesn't cover all situations encountered in real estate. -E&O insurance isn't permitted at the licensee level, only at the broker level.
The listing agent stops working on the listing. The only valid reason listed here is listing agent abandonment, which is when the listing agent stops working on the listing.
Which of the following is a legitimate and legal way that an exclusive right-to-sell listing agreement may terminate without the seller owing a commission? -The seller has a change of heart. -The seller decides to sell the property without an agent. -The seller locates a buyer. -The listing agent stops working on the listing.
Offer to purchase The sales contract is known by several names, including the offer or offer to purchase. It documents the buyer's offer to the seller to purchase the property identified in the agreement.
Which of the following is synonymous with a sales contract? MLS listing Mortgage Promissory note Offer to purchase
Timeshare estates can be sold or passed down to heirs. Like other forms of fee simple ownership, timeshare estates can be sold or passed down to heirs.
Which of the following statements is true regarding timeshare estates? Timeshare estates can be sold or passed down to heirs. Timeshare estates cannot be sold. Timeshare estates are illegal. Timeshare estates cannot be passed down to heirs.
Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values. Blockbusting is the practice of convincing homeowners that a demographic shift could result in reduced property values or the inability to sell their properties.
Which of these situations represents the illegal practice of blockbusting? -Celia, a licensee, distributed a flyer in several neighborhoods, claiming that gentrification of those neighborhoods will increase property values. -Estelle, a broker, warns potential clients about the upcoming zoning change in a neighborhood that is currently zoned as residential. -Kian, a mortgage broker, refuses to underwrite mortgage applications from applicants who are Hispanic or Asian. -Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values.
An abstract is a condensed history of all recorded documents impacting on title. The abstract of title process is costly and lengthy; only a few states require this process when conveying property.
Which of these statements about an abstract of title is correct? -Title abstracts provide data for the title company's title search. -A title company representative must certify the abstract of title. -The chain of title documents the information found during the title abstract process. -An abstract is a condensed history of all recorded documents impacting on title.
The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly. The Clayton Act of 1914 supports the Sherman Antitrust Act of 1890 by prohibiting mergers or acquisitions that would result in an unreasonable reduction in competition or the creation of monopolies.
Which of these statements most accurately represents existing federal antitrust legislation? -The Federal Trade Commission Act established the Sherman and Clayton acts to prevent collusive activities that limit competition. -The Sherman Antitrust Act was passed to supplement the Clayton Act in an effort to prevent mergers that create monopolies. -The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly. -The Federal Trade Commission Act prevents one large firm from acquiring another similar firm that would result in a restraint of trade.
A verbal lease agreement Martha has with her neighbor who leases Martha's garage The title policy won't exclude property taxes (assuming they're properly recorded), though the taxes must be paid before the policy will be issued. The verbal lease agreement is excluded with a general statement noting that leases not of record are excluded.
Which of these will a title insurance policy on Martha's property exclude on the schedule of exceptions? -A mechanic's lien recorded by A1 Siding and Windows -A verbal lease agreement Martha has with her neighbor who leases Martha's garage -Last year's unpaid property taxes -The current year's unpaid property taxes
Modified gross lease A modified gross lease typically includes all of the nets (taxes, insurance, maintenance) in the base rent, but not utilities or cleaning services.
Which type of lease will typically include taxes and insurance in the base rent, but not utilities or janitorial services? Full-service lease Gross lease Modified gross lease Triple-net lease
Both parties, their heirs, personal representatives, successors, and assigns
Who is bound by the purchase agreement? -The buyer and seller only -Both parties and their immediate families -Both parties, their immediate families, and their brokers -Both parties, their heirs, personal representatives, successors, and assigns
Their taxes are likely to increase when the abatement period ends. 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.
Why would buyers want to know whether a property is currently experiencing a tax abatement? -Their taxes will go down when the abatement period ends. -Their taxes are likely to increase when the abatement period ends. -The current tax amount will be indicative of future years' taxes. -Buyers don't want to know whether a property is experiencing a tax abatement.
Taxes, maintenance, and insurance In a triple net lease, the tenant pays for taxes, insurance, and maintenance. The first letter of each expense spells out TIM.
With a triple net lease, the tenant pays ______. Taxes, debt service, and lease payment Maintenance, insurance, and debt service Insurance, utilities, and maintenance Taxes, maintenance, and insurance
A down payment toward the purchase price The option fee is typically a one-time fee that the buyer will forfeit if the right to purchase isn't exercised. If a portion of the monthly rent is set aside, it's usually applied toward the property's purchase price.
Woody has a lease with an option to buy on his penthouse apartment. Each month, 20% of his lease payment goes toward ________. Maintenance and utilities A down payment toward the purchase price Property taxes The option fee
You can only provide a copy if you get permission from Terry and Josie. Inspection reports are the property of the buyers who paid for the inspection. Copies may only be provided to sellers or listing agents if they buyers give you permission to do so.
Your buyer clients Josie and Terry made an offer that was accepted on a cute bungalow in a city neighborhood. They just received the inspection report and were delighted to see only minor condition issues. They'd like the sellers to replace two windows that have broken seals. In response, the sellers asked for a copy of the inspection report. What must you do? -You must request permission from the inspector, who holds the copyright. -You can copy the pages related to the windows and provide those. -You can only provide a copy if you get permission from Terry and Josie. -You're required to provide a copy of the report to the sellers.
$10,170 A point is 1% of the loan amount. Faye's loan amount is 60% of the sales price, or $339,000 ($565,000 x 0.60). Her lender is charging three points total, or 3% of the loan amount. That comes out to $10,170 ($339,000 x 0.03).
Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she's going to pay on her loan? $4,520 $16,950 $10,170 $6,780
Household income threshold When applying for a down payment assistance program, both the buyer and the home must meet eligibility requirements.
Your clients, Yuliana and Moe, are looking to buy a new house to accommodate their growing family of eight. They don't have enough money to put down for the home they'd like to purchase and are thinking about applying for a down payment assistance program. What eligibility requirement they might encounter would you need to inform them of? Number of minors living in the residence Age of potential homebuyer Square footage of new home Household income threshold
A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores Loans insured by the Federal Housing Administration require a 3.5% down payment and permit buyers with lower credit scores to qualify for a loan.
o which of the following borrowers might a lender be most likely to recommend an FHA loan? -An investor who intends to use equity in another investment property as his down payment -A single stockbroker with a $40,000 down payment and significant assets in a stock portfolio -A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores -A retired couple interested in downsizing from a large four-bedroom house they own free and clear to a condominium
