Texas Real Estate II

What is meant by unimproved land, which investors call "dead money"?

A property that is vacant with no buildings

Under RESPA's Section 8, which of the following scenarios would be considered a kickback?

A title insurance company buys you dinner to thank you for referring a client.

Carmen's original one-year commercial lease has ended, and now, with her landlord's permission, she has gone into a month-to-month lease situation. What type of clause was in the original lease agreement that enabled this situation to occur?

Automatic renewal

Jimmy is a real estate investor who owns several rental properties in the area. After the economy took a turn, he was relying on TRA 86 to be able to deduct some of his losses. He is active in the management of the properties and his taxable income is $90,000. What is the maximum deduction Jimmy can claim on his taxes to make up for his losses on those rental properties?

$25,000

Morgan is a single taxpayer and real estate investor. She buys homes for cheap, fixes them up while living in them, and sells them for a profit. How much can she exclude if she realizes a gain from the sale of her current property (assuming she meets all the criteria to exclude the gain)?

$250,000

Jim and Crystal bought their rundown little "shack" 15 years ago. Over the years, they've made structural improvements, built additions, and remodeled nearly every square inch of the property. They're ready for their next adventure and have sold their property for a capital gain of $300,000. Assuming they meet all the criteria to qualify for the capital gain exclusion (and are married filing jointly), how much of this gain can they exclude?

$300,000

A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)?

12.5

What's a purchase money mortgage?

A form of seller financing in which the seller gives the buyer a mortgage toward the purchase price.

Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What's Clark most likely asking you to provide?

BPO

What is the definition of "before-tax cash flow"?

Cash flow before taking income taxes into account.

Which of the following units of measurement are used when determining volume?

Centimeters cubed

Ensuring you've answered the word problem correctly is which of the following steps?

Checking

When the buyer and seller both have costs to pay, which form shows who pays what?

Closing disclosure

In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?

Comparables

Which of the following provides an opinion of list price range by looking at recently sold properties, comparing current competing properties and properties that didn't sell, and estimating buyer appeal regarding the style, location, and size?

Comparative market analysis

When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?

Competition

Jerry's home has been in his family for nearly 75 years and sits smack dab in the middle of where a public university wants to expand. A government authority has made a fair offer for seizing Jerry's home as part of the process of taking someone's property called ______.

Condemnation

What's the term for an amount that shows up on the closing statement in a particular party's favor?

Credit

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 (round to the nearest dollar).

Credited $1,207

How do you calculate the daily rate for annual taxes using a calendar year?

Divide by 365

When presenting a CMA, if you take the time to explain the CMA process, help the prospective sellers understand what's behind the numbers, and ultimately leave the decision of the list price up to them, what characteristic have you demonstrated?

Effective communication

Smalltown is building a new interstate exchange to facilitate access to shopping and restaurants. In order to do so, it purchased two homes and tore them down so the ramps to and from the interstate could be constructed. What principal allowed Smalltown to do this?

Eminent domain

Which of the following prohibits lenders from discriminating based on protected class status?

Equal Credit Opportunity Act

Which term is defined as land lost due to water, wind, or other natural disturbances?

Erosion

Paul wants to rent an apartment from Wendy, but he doesn't have a Social Security number. Wendy explains that in order to rent to him, he must provide her with an acceptable form of identification. Paul hands her his green card. What does Wendy do?

Hands Paul a lease agreement to fill out

When the pre-qualification letter is provided, the buyer ___________.

Has some assurance of being able to qualify for a loan

Appraiser Jamie is looking past how a property is being used to determine a higher value. What is Jamie determining?

Highest and best use

Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?

Highest and best use

______ determines who the heir or heirs will be if a person dies without a will.

Intestate succession

Which of the following statements about corporate conveyance of real estate in Texas is true?

It is allowed as long as certain rules are followed.

In a title theory state, which of the following is a true statement?

It's generally much easier for a lender to foreclose on a property.

The doctrine of "use it or lose it" is known as the doctrine of ______.

Laches

If a tenant moves out before a lease term expires and the landlord is able to rent the unit, the tenant is ______.

Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit

Per Texas's Privacy Policy law, property managers are required to explain in their privacy policy how they plan to ___________________________.

Maintain the confidentiality and security of their tenants' Social Security numbers

What will be of the highest concern to a fix-and-flip investor once the property is rehabbed?

Making a profit quickly to start a new project

Which program offered by the TDHCA helps residents purchase their first home?

My First Texas Home

Which of the following statements about improvements and lease agreements in Texas is true?

Neither the landlord nor the tenant is required to make improvements to a leased property.

Which entity insures VA loans?

No entity, because they are guaranteed by the U.S. Department of Veterans Affairs

Reporting on local economic and other trends and activities will help you and the property owner plan and set goals. Which of the following trends would have the most negative impact on your property's vacancy rates?

One of your closest competitors has just finished a complete renovation of its property.

Which of the following is a top priority for a buy-and-hold investor?

Positive cash flow

Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%?

Private mortgage insurance

Jasmine has a tenancy-at-will lease agreement with her landlord. How much notice must she give her landlord when she's ready to terminate the lease?

Proper advance notice

Like other agency agreements, the property management agreement details the terms of "employment" between the _______ (agent) and the _______ (client).

Property manager; owner

What information about the property is included in the Uniform Residential Loan Application?

Property value

What type of deed releases any rights of the grantor to the property to the grantee and clears any clouds on a title, but does not offer any warranties to the grantee?

Quitclaim deed

Which of the following duties is part of the licensee's role in a residential lease transaction for a tenant client?

Represent the client's interest in all negotiations and transactions regarding the property lease.

Which of the following statements is true regarding the "Bootstrap" program?

Requires the mortgagor to supply at least 65% of the labor.

In which market do lenders purchase packaged loans?

Secondary mortgage market

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

Seisin

What factor is a primary concern to the fix-and-flip investor?

Selling quickly for fair market value

Gretchen receives a call from a prospective employer wanting information on one of her tenants. In accordance with the FTC privacy rule, Gretchen can do which of the following?

Share information about her tenant with the prospective employer without her tenant's written consent.

Topography depicts the physical features and contours of a project, including rocks, trees, and other vegetation, as well as ______.

Soil types

Which of the following statements about the Texas Apartment Association is true?

TAA provides its members with association-prepared lease forms.

Which of the following is considered an acceptable form of identification for a prospective tenant who doesn't have a Social Security number?

Temporary resident card

Recently, Francine and her husband, Frank, decided to purchase and restore a historic home in the downtown area. To be eligible for the tax credit for these renovations, Francine and Frank must follow specific federal guidelines when they renovate and restore the home. In addition, the home must be designated as an actual historic property by which of the following?

The Department of the Interior

Grady Gumble had a durable power of attorney in place when he died while rock climbing. His attorney-in-fact is Gail Fife. Given the situation, which of the following statements is true?

The POA terminated upon Grady's death.

Who is responsible for obtaining evidence of title and title insurance?

The buyer

Which entity enforces subdivision covenants?

The civil court system

Which of the following statements is true about constructive eviction in Texas?The court may award damages to the tenants and order the landlord to make repairs.

The court may award damages to the tenants and order the landlord to make repairs.

Select the statement that correctly exemplifies the covenant term.

The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on.

According to the Doctrine of Relation Back, once the conditions of the escrow agreement have been met, what must occur for the transfer of property to happen?

The deed must be delivered to the escrow agent.

Which of the following statements is true about activities related to the closing process?

The funds a buyer brings to closing must be provided in the form of a cashier's check, a certified check, or a wire transfer.

Which of the following bits of data is crucial in a proration?

The number of days in the proration period

What special concern do foreclosed properties often present?

There could be hidden title issues.

Which of the following is a benefit of automated underwriting?

There is no chance of personal prejudice entering into the decision.

Why do lenders require a borrower to establish and maintain a reserve fund?

To pay any property taxes in case the borrower misses a payment

You have a client who's leasing commercial space. The lease terms call for him to pay a portion of the landlord's taxes, insurance, and maintenance. What type of lease does your client have?

Triple net lease

How long does a homeowner have to pay off outstanding liens against his property?

Until the foreclosure sale is held

Julian is glad that the property owner at the townhouse community he manages established a substantial capital reserve budget for unexpected expenses, like the new roofs needed after a hail storm. What are these types of expenses called?

Variable

A property appraises at $320,000. If the assessment rate is 100% and the tax rate is $1 per $100, what are the semi-annual property taxes?

$1,600

Calculate six months' interest on a $4,000 loan at 7.5%. Round to the nearest dollar.

$150

What maximum percentage of a VA loan is guaranteed?

25%

In Texas, approximately _______ of land is publicly owned.

5%

Which board determines the national rules for creating an appraisal and reporting its results?

Appraisal Standards Board

Which deed type may come with or without covenants of warranty?

Bargain and sale

To qualify as a Texas veteran, a person must ______.

Be at least 18 years old

In which form of price determination does the real estate professional often just drive by the property and take photos, then complete paperwork for the lender?

Broker's price opinion

The risk that the required return on investor capital will not be met is called ______ risk.

Business

A real estate transaction has a closing date of April 20. The seller, who's responsible for closing costs up to and including the day of settlement, has already paid property taxes of $1,447 for the calendar year. If proration is based on a statutory calendar, the buyer will be_______ on the closing statement.

Debited $1,005

By law, any adverse action taken against an applicant that is based on the credit report must be ______.

Disclosed to the consumer in writing

The Doctrine of Relation Back is a/n _______.

Legal assumption that states that something done today will be treated as if it were done earlier

Which of the following is an example of a leisure property?

Motel

Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately?

Net

Which of the following are types of computerized loan origination systems (CLOs)?

Open and closed

What's the amount of money you have now called?

Present value

Which type of RD loan program provides eligible applicants with the option to build, rehab, improve, or even relocate a dwelling in an eligible rural area?

Single Family Housing Guaranteed Loan Program

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 Siegels' depreciation basis calculations?

The loan origination and lender fees that they paid at closing

Why do the seller's and buyer's agents attend the closing?

To provide support to their clients

How many parties does a mortgage involve?

Two: borrower and lender

Which of the following is the process the lender uses to evaluate whether to make the loan?

Underwriting

Which factor that influences value considers the property's function?

Utility

Which veteran loan program offers qualified veterans help with the purchase of land in Texas?

Veterans Land Program

Which type of business risk is insurable?

Which type of business risk is insurable?

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)

Which term defines an oath by a subscribing witness, such as a notary public, that the grantor's signing of the deed is a voluntary act and enables a deed to be recorded?

Acknowledgment

In Texas, a suit for possession breach of lease remedy is also referred to as a _______.

Forcible detainer notification

Another term for a valuation is ______.

Formal appraisal

Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution?

Freddie Mac (FHLMC)

A form of depreciation or loss in value caused by defects in design defines which of the following terms?

Functional obsolescence

In Texas, a testator must be of legal capacity. What does that mean?

The testator must be of sound mind and at least 18 years of age.