Practice Test 2 : Questions Answered Incorrectly or Guessed

conventional (fixed rate) mortgage

Interest rate and monthly payment amount remains the same for the life of the loan. typically not assumable.

What is the strategy used to purchase real estate with a loan when the purchaser does not have sufficient funds available to make the purchase?

Leverage (OPM)

Bart owns a large parcel of land that borders a fish filled stream. What right is associated with the stream?

Riparian Rights. A riparian owner is someone who owns land next to a flowing body of water (e.g., a river or stream). The owner could have riparian water rights for water bordering the property.

Age 59 ½ Rule

Taxpayer Relief Act permits a first time home-buyer to take an IRA distribution of up to $10,000 to help fund the purchase, without the 10% penalty for taking an early distribution.

Capitalization Rate

The rate of return a property will produce on the owner's investment. is the main method to compute the present value of an income producing property

Concurrency

The requirement that minimum infrastructure is required before development can occur. Concurrency was put in place by local growth management laws related to the Growth Management Act.

Sheena purchases a home with an FHA mortgage. What is the name of the one-time fee that she paid at closing?

UFMIP (up-front mortgage insurance premium) is the one-time fee that she paid at closing

An Express Contract

a contract stated in oral or written words is known as

What is a name for a municipal board or group that has the task of protecting a neighborhood's historic building designs?

architectural review board

Which of the following is a type of circuit breaker that can detect a small leakage of electrical current?

GFCI (ground fault circuit interrupter) can detect a small leakage of electrical current

Grace is 40 years old and wants to buy a home for the first time with money from her IRA investment account. What is the maximum that she can withdraw from her IRA account without any penalty?

$10,000

Hyena purchases an investment property in the city for $750,000. In the first year, the property generated an annual cash flow of $75,000, but she sustains a $25,000 tax loss that she can apply against the income of a very successful car wash that she owns. If Hyena is in the 35% tax bracket, what is her after-tax cash flow related to the city property?

$35,000 $75,000 (annual cash flow) + $25,000 (tax loss) = $100,000 x .35 = $35,000. After-tax cash flow is calculated by adding back the tax loss to the income and then multiplying by the tax rate. A tax savings is possible when a tax loss can reduce the taxable income of a separate investment.

Which of the following is true about the right to quiet enjoyment? It is an issue affecting neighboring property owners. A landlord is required to provide it to a tenant. No consent in necessary to enter a leased property. A landlord is entitled to quiet enjoyment with respect to an occupying tenant.

A landlord is required to provide it to a tenant.

Condop

A residential establishment that includes both a condominium and cooperative ownership structures. Typically refers to the residential portion of a building which is treated as a single condominium unit owned through a cooperative-ownership structure.

Which clause in a mortgage permits the bank to require that the remaining balance immediately be paid if the buyer defaults on the loan?

Acceleration Clause

ARM

Adjustable Rate Mortgage

A summary of the history of title to a piece of real property is:

An Abstract of Title is a shortened or concise history of the chain title

Federal Fair Housing Act of 1968

An act prohibiting discrimination in the sale or rental of housing on the basis of race, color, religion or national origin sex, handicap and familial status.

Dolores purchased a 50 year old home and learns that her underground drainage system pipes are corroding and leaking. Which type of pipe will she need in her underground drainage system?

Cast Iron

Which was the first law to prohibit restrictions on the purchase or sale of real estate due to a person's race?

Civil Rights Act of 1866

Reimer owns a 50 acre commercial parcel that he seeks to develop into a warehouse park. The County tells him that he must first install basic infrastructure. What is the name for that requirement?

Concurrency

Which type of ownership combines characteristics of 2 different ownership structures?

Condop

Which covenant in a deed represents that there are no liens on the property?

Covenant against encumbrances

What type of program is used by a County to assess property values in two separate areas that use different valuation percentages in order to ensure both areas are taxed fairly?

Equalization An equalization program is used by a municipality to assess property values in two separate towns that use different valuation percentages in order to ensure both towns are taxed fairly. One town may assess property at a lower percentage of value than the other, so to ensure that the municipality acts equitably it equalizes the varying rates.

Which of the following co-ownership choices requires unities of possession, interest, time and title?

Joint Tenancy

Craig is searching for a property with tangible rights. Which of the following will provide him with a tangible right? Land Rights Water Rights Rights to Gold in Soil Air Rights

Land Rights are tangible; the other options are not.

Helga has a New Year's Eve party in her backyard. Gerry, one of her guests, gets intoxicated and dives into the shallow end of her pool. He punctures the liner and also becomes paralyzed. Which coverage will protect Helga for the damage to the pool liner?

Other structures

What does the term execute mean relative to a deed?

Signing the Deed

Corrine hires Al's Contracting to renovate her home. When he is finished, he sends Corrine the bill, but she fails to pay it. He sues Corrine and obtains a judgment for $50,000 and records a lien against Corrine's home. What type of lien does Al have? Service Lien Specific Lien General Lien Voluntary Lien

Specific Lien Al has a mechanic's lien (resulting from labor provided to a property), which is a type of specific (against a specific piece of property) and involuntary (obtained through a legal proceeding) lien

An organization that includes several people jointly participating in an investment into real estate is a(n):

Syndicate

Which was the first law to prohibit restrictions on the purchase or sale of real estate due to a person's race? Civil Rights Act of 1866 Federal Fair Housing Act Civil Rights Act of 1964 HUD Civil Rights Act of 1866

The Civil Rights Act of 1866 prohibits restrictions on the purchase or sale of real estate or personal property due to a person's race and provides that all citizens have the same rights regarding the inheritance, sale, purchase or lease of real and personal property.

The value of an asset based on its past, current or future value is called

Time value of money

Spot Zoning

When a particular property or group of properties is rezoned to permit a use different form the neighboring properties use.

one-time show agreement

entered into by a seller and an agent that permits a one-time showing to a specifically identified buyer. The agent receives a commission if the named buyer purchases the property.

Amortization

payment of a debt with installment payments

price fixing

the practice of colluding with other firms to control prices

Leverage

the use of borrowed money to supplement existing funds for purposes of investment. Leverage provides a purchaser with increased buying power, and permits the buyer to purchase a property even though sufficient capital is not available. (example : a mortgage)