TX 30 Hour Principles of Real Estate II Exam Questions

Compared to homes built before 2004, ENERGY STAR®-qualified homes are rated how much more energy efficient?.

15%

How long is depreciation for non-residential income-producing properties?

39 years

Which percentage reflects the top debt-to-income ratio limit for qualified mortgages?

43%

Investors who want to use the 1031 tax-deferred exchange must identify the property within _______ days and close within _______ days.

45 180

Nina and Rob prepaid some of their interest to their lender when financing their new home. What's this called?

A buydown

What does "cash-on-cash return" mean?

A comparison of before-tax cash flow to cash invested

What is the Doctrine of Relation Back?

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

What type of professional must an investor use to conduct a tax-deferred exchange?

A qualified intermediary

April was able to establish a day care in a residential neighborhood, where businesses would not normally be permitted. This required approval of the planning and zoning commission and _____________.

A special use or conditional use permit

What are the benefits of an energy-efficient mortgage (EEM)?

An EEM can help the borrower qualify for a larger loan due to the potential energy savings on a monthly basis.

Which of the following actions likely requires a variance?

An addition which alters the setback

What type of mortgage allows the purchaser to include the cost of the energy improvements into the mortgage without an increase in their down payment?

An energy-improvement mortgage

According to the FTC privacy rule, a landlord or property manager would have to obtain a tenant's written consent before sharing the tenant's personal information with which of the following?

An unaffiliated third party

When must lenders provide borrowers with a disclosure statement regarding finance charges, annual percentage rate, etc.?

At loan application or within three days after loan application

Which of the following is typically used for purposes other than a prospective listing or sale?

BPO

Besides the federal rules, which Texas entity or entities sets forth the state rules surrounding kickbacks?

Both TREC and the TDI

What is the process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject?

Bracketing

One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______.

Bulk zoning

Dynamic and static risk are considered ________ risks.

Business

Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?

Busy Street

The ______ is responsible for paying appraisal and credit report fees.

Buyer

Who's responsible for any tax reserves required to pay property taxes?

Buyer

In terms of investment, liquidity means an investment ______.

Can easily be converted to cash

What's the amount called that sellers make on the sale of their home?

Capital gain

which CLOs are accessed through an intermediary such as a real estate or mortgage professional?

Closed CLOs

The developer of a new subdivision is placing residential properties closer together, allowing him to include large open spaces throughout the development to build bike and walking trails, as well as a community pool and recreation center. What type of zoning is this?

Cluster

What is the broker's role at closing?

Collect commission

What type of insurance provides two or more forms of coverage (e.g., business crime, business auto, boiler and machinery, marine and farm, liability) for commercial properties?

Commercial Multi-Peril

Which agency administers the Interstate Land Sales Full Disclosure Act?

Consumer Financial Protection Bureau

Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole?

Contribution

The amount covered by the new loan is a ______.

Credit to the buyer

Sherman gave Alexi a two-acre parcel for free. This transfer of property is known by what term?

Deed of gift

The acquisition cost of an investment property plus any improvements or renovations is the investment's...

Depreciable basis

According to Texas's Identity Theft Enforcement and Protection Act, what should property managers and landlords do with old tenant records that contain sensitive personal information?

Destroy the files

Ricardo has left a gift of real property in his will to his son, Juan. Ricardo is the ________________________ and Juan is the ______________.

Devisor, devisee

Which of the following could an investor who sells an apartment house buy using a 1031 exchange?

Duplex, office building, or warehouse

Green mortgages are also known as what?

Energy efficient mortgages

In Texas, which type of leasehold lasts for a defined time period and automatically terminates when that period ends?

Estate for Years

Which act requires a property manager to send an adverse action letter to the rejected applicant if the decision to reject were based in whole or in part on the applicant's credit score?

Fair Credit Reporting Act (FCRA)

The risk that is directly related to leverage is called ______ risk.

Financial

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

Forcible Detainer Notification

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

Freddie Mac (FHLMC)

What two types of data does an appraiser gather?

General and specific

What institution was formed in 1968 and took over the sale of the government loan market?

Ginnie Mae (GNMA)

How do you calculate interest rate?

I / LB

Harrison owns a shopping center that had significant retail client turnover in the past couple of years. He's asked the property manager, Prasad, to revamp the marketing plan to try to eliminate turnover. Prasad completed the market analysis; what step should he undertake next?

Identify appropriate retail targets

Value Equation

Income / Cap Rate

Which approach to value is typically used for investment property of two- to four-family units?

Income Approach

Static Risks

Insurable risks

An amortized loan includes a regular payment that includes both principal and _________ to gradually pay off the loan over its entire term.

Interest

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

Intestate succession

Which of the following statements is true about using utilities interruption as a means of collecting rent?

It is illegal.

What could be a consequence if there were no secondary mortgage market?

Lenders might not have funds available to make new loans to the public.

At what level are budgeting, site plan review, and building codes controlled?

Local

What attracts borrowers to adjustable rate mortgages?

Lower initial interest rate

Why is it important for tenants and owner/landlords to review the insurance section of a commercial lease?

Many times, the amount of insurance specified in the lease is higher than the amount a tenant actually carries, and higher than the amount the landlord actually requires.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

Marsha's second mortgage on the property, which was properly recorded in January.

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 Lease

Which entity insures VA loans?

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

Dynamic Risks

Non-Insurable Risks

Which type of real estate property can be divided into classes A, B, and C?

Office buildings

How often can interest rates change on an adjustable rate loan with a flexible payment plan?

Once a month

Hunter Green is getting ready to move into a new apartment in a small town in west Texas. The landlord has already informed Hunter that she will require a security deposit from him and that the amount of the deposit will be equivalent to ______ rent.

One month's

In a sublease situation in Texas, who has the right to evict the sublessee?

Only the original tenant

Although a valid deed in Texas doesn't require a grantee's signature, a signature is required if the deed is used to settle property claims in the event of a death or divorce. This type of deed is known as a(n) ______ deed.

Owelty

What is the term for an increase in property value caused by the joining of two neighboring parcels of land?

Plottage

Which of the following is a piece of general data an appraiser may gather?

Population Size

Mortgages may still, but only rarely, contain which of the following clauses?

Prepayment Penalty Clause

When the value of a property increases thanks to an adjacent higher-quality property, It is called...

Progression

Which of these properties are exempt from the FIRREA federal appraisal guidelines?

Properties valued at $400,000 or less

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?

Purchase Money Mortgage

What type of real estate investment may meet the definition of being a security and must adhere to the rules and regulations of the Securities and Exchange Commission?

Real estate syndicate

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?

Rent

Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel's mortgage?

Savings and Loan

The ______ is responsible for paying for recording documents to clear all defects from the title.

Seller

What types of capital gains may property owners encounter?

Short- and long-term

Forecasting the income and expenses that we can reasonably expect to bring in and pay out over a short term results in a budget that's every property manager's dream. That budget is ______.

Stabilized

What's the first step an appraiser will perform when conducting an appraisal?

State the problem

Accident liability, fire, theft, and vandalism are types of _______ risk.

Static

Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.

Subprime Loans

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

Who must appear before a public officer in order for a deed to be acknowledged?

The Grantor

Which form is used by the borrower when shopping for a loan?

The Loan Estimate Form

______ usually pays the broker commission.

The Seller

What is the 200% rule as it relates to tax-deferred exchanges?

The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property.

The owner's covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property's legal owner. What's the third key piece of information?

The fact that the owner is not facing foreclosure

Which of the following is true of construction loans?

The loan is based on the builder's plans for improvement and an appraisal.

In a 1031 exchange, there are rules governed by Section 1031 of the Internal Revenue Code. The rules include _______.

The property in an exchange must be like-kind.

How are creditors or lien holders paid during a foreclosure process?

The property is sold at auction and lien holders are paid from the proceeds of the sale.

Who is ultimately responsible for ensuring that any hazardous waste produced at an apartment complex is properly disposed of?

The property owner or manager

Which option is true if a deed is not recorded after closing?

The property's legal ownership can be challenged.

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

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

Jan is a real estate licensee gathering information to help her seller determine a good listing price. How could expired listings help her in this process?

They illustrate the price at which the property won't sell.

Julia and her husband, Mark, are financing the purchase of their new home. Their lender requires that they have title insurance. When and how often will they need to pay the title insurance?

They will only pay once, at the time that the policy is issued.

Texas has its share of environmental woes. Three regions within the state have been designated as failing to meet what federal standards?

Three regions of Texas have been designated by the EPA as failing to meet the Clean Air Act standards since 2011.

How many parties does a deed of trust involve?

Three: borrower, lender, and trustee

What is the purpose of the TDHCA?

To help Texans with their housing needs

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

To provide support to their clients

Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What's the maximum number of adjustments Steve should make to the Joneses' property?

Zero

Dynamic risks are those business risks that cannot be lessened with insurance. This includes...

economic, tax, and market changes.