Chapter 24 Random Math

Question 1

The “possession date” in a standard form contract of purchase and sale is:

A. the date on which the buyer takes vacant possession of the property, subject to any existing tenancy agreements.
B. the date on which adjustments are made between the parties for property taxes, etc.
C. always the same day as the completion date.
D. the date on which the buyer must assume responsibility for risk of loss or damage to the property.

Which of the above statements are TRUE?

(1) Only A and D are true.
(2) Only A is true.
(3) Only B is true.
(4) Only C is true.

Answer 1

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Question 2

Veronica has agreed to sell her home to Patty for $75,900. The completion and adjustment date is set at November 14th. Veronica paid the current year’s property taxes on the date they were due in the amount of
$896. It is NOT a leap year. Patty’s share of the year’s property taxes will appear on the seller’s statement of adjustments as a:

(1) debit of $115.38.
(2) credit of $115.38.
(3) debit of $41.73.
(4) credit of $117.83.

Answer 2

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Question 3

Vince has agreed to sell his home to Pedro for $75,900. To assist in the purchase, Pedro is borrowing
$65,000 from his uncle as a first mortgage loan. Pedro’s loan from his uncle will appear:

(1) as a debit on Pedro’s statement and a credit on Vince’s statement.
(2) as a credit on Pedro’s statement and a debit on Vince’s statement.
(3) only on Pedro’s statement.
(4) only on Vince’s statement.

Answer 3

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Question 4

Valerie has agreed to sell her home to Phil for $75,900. The real estate commission payable by Valerie is 7% of the selling price. The real estate commission will appear:

(1) as a debit on Phil’s statement and a credit on Valerie’s statement.
(2) on Valerie’s statement only.
(3) as a debit on Phil’s statement.
(4) as a credit on Phil’s statement and a debit on Valerie’s statement.

Answer 4

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Question 5

Vincent and Pamela signed a standard contract of purchase and sale for the sale of Vincent’s property. Vincent agreed to give title free of encumbrances. Pamela is putting on a new mortgage. Costs are as follows:

Legal fees for conveyance $400.00
Legal fees to discharge an existing mortgage on title $100.00

Which one of the following statements is correct with respect to the statement of adjustments?

(1) For her share of the above fees, Pamela will have a debit of $500.
(2) Vincent should be credited $100.
(3) Pamela should be debited $400 and Vincent should be debited $100.
(4) Pamela should be debited $400 and credited $100.

Answer 5

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Question 6

Where would the commission appear on the statements of adjustments?

(1) It would appear as a credit on the buyer’s statement and as a debit on the seller’s statement.
(2) It would appear as a debit on the buyer’s statement and as a credit on the seller’s statement.
(3) The commission only appears on the seller’s statement.
(4) The commission only appears on the buyer’s statement.

Answer 6

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Question 7

Victor is selling his house to Paula with an adjustment date and a possession date of August 16th, and a completion date of August 14th. He is concerned about the fact that he just filled his oil tank. Which one of the following is TRUE?

(1) The conveyancer will give Victor a debit on the statement of adjustments for the oil in the tank.
(2) Victor will lose the cost of his oil. He should not have filled the tank.
(3) Victor could arrange to have a reading done on the adjustment date and make an adjustment privately with Paula for the cost of the oil remaining in the tank on that date.
(4) The cost of oil remaining in the tank must be calculated as at the completion date and Paula must reimburse Victor for that amount.

Answer 7

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Question 8

Which one of the following statements correctly describes the manner in which taxes are adjusted?

(1) If the seller has already paid the current year’s taxes, the seller must be given a credit of the taxes from the adjustment date to December 31.
(2) If the taxes are overdue and a penalty is owing, both the amount of the taxes and the penalty must be apportioned between the buyer and the seller.
(3) If the taxes are not yet due, no adjustment is made until the tax bill arrives.
(4) All of the above are correct.

Answer 8

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Question 9

In a particular real estate transaction, taxes for the current year, in the amount of $516, were paid by the seller on July 1st. The adjustment, possession and completion date is July 28th. Where would the tax adjustment appear on the statements of adjustments?

(1) As a credit on the buyer’s statement and a debit on the seller’s statement.
(2) As a credit on the seller’s statement and a debit on the buyer’s statement.
(3) As a credit on both statements.
(4) As a debit on both statements.

Answer 9

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Question 10

Which of the following statements is/are TRUE?

A. On the completion date of the sale of real property, the buyer is usually entitled to the transfer of title.
B. The total of the debit column on the seller’s statement must be identical to the total of the credit column on the buyer’s statement.
C. The practice is to hold the seller responsible for the taxes on the adjustment date itself.
D. The adjustment date and the possession date must be the same day.

(1) All of the above statements are true.
(2) Only A and B are true.
(3) Only A is true.
(4) None of the above statements are true.

Answer 10

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Question 11

Which of the following would appear as a debit on the seller’s statement of adjustment?

(1) the amount of a mortgage which the buyer will assume
(2) the legal fees involved in discharging a judgment from the seller’s title
(3) the amount of a penalty owing for overdue taxes
(4) all of the above would appear as a debit on the seller’s statement

Answer 11

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Question 12

In a real estate transaction, when the property taxes for the subject property are not yet due and will be paid in the future by the buyer:

(1) no entry is made on either statement of adjustments.
(2) the seller’s share of the property taxes will be debited on his or her statement of adjustments.
(3) the buyer will be responsible to pay his or her share of the property taxes to the seller on closing.
(4) the seller’s share of the property taxes will be credited on his or her statement of adjustments.

Answer 12

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Question 13

Benson has purchased a home from Vanessa. The sale is completed on April 15 and the property taxes are adjusted on the completion date. Property taxes are due on July 1. In this case:

(1) Vanessa will have to pay Benson for the share of the taxes from January 1 through April 14.
(2) Vanessa and Benson will each pay 1/2 of the current year’s taxes on July 1st when they are due.
(3) Benson will have to pay Vanessa for his share of the year’s taxes after she pays them on July 1st.
(4) neither Vanessa nor Benson will have to pay any taxes on July 1st because the sale completed on April 15th.

Answer 13

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Question 14

Which of the following statements is TRUE?

(1) Taxes always appear as a credit on the seller’s statement of adjustments and as a debit on the buyer’s statement of adjustments.
(2) Where the licensee acts only for the seller, real estate commission always appears as a debit on the seller’s statement of adjustments and does not appear on the buyer’s statement of adjustments.
(3) Legal fees always appear as a debit on the buyer’s statement of adjustments and as a credit on the seller’s statement of adjustments.
(4) None of the above are true.

Answer 14

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Question 15

At the time a transaction is completed which one of the following items will be the responsibility of the buyer?

(1) tax penalty with respect to overdue taxes
(2) costs of preparing a first mortgage
(3) unpaid taxes to possession date
(4) commission

Answer 15

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Question 16

Where a deposit is paid directly to a seller on account of the purchase price:

(1) the amount of the deposit will appear only on the buyer’s statement of adjustments.
(2) the amount of the deposit will appear on both the buyer’s and the seller’s statement of adjustments.
(3) the deposit will only appear on the seller’s statement of adjustments.
(4) the deposit will not appear on either statement of adjustment.

Answer 16

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Question 17

You have sold your property with the adjustment date on September 20. You had paid the taxes on July 2. The buyer should be responsible for that share of the tax bill from and including:

(1) January 1 - September 20.
(2) September 20 - December 31.
(3) September 21 - December 31.
(4) July 2 - December 31.

Answer 17

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Question 18

Vince sold his property to Paula with a possession and adjustment date of May 1. Vince has not yet received his current year’s tax notice, but last year’s taxes were $847.00. Paula’s lawyer feels taxes will increase 20%. Which of the following is correct?

(1) Paula should be given a credit for the estimated taxes between May 1 and December 31.
(2) Vince should be charged the estimated taxes from January 1 to April 30.
(3) There is no way to attempt a tax adjustment until the actual bill arrives.
(4) The taxes will appear as a debit on Paula’s statement of adjustment and a credit on Vince’s statement of adjustment.

Answer 18

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Question 19

Valentina has agreed to sell her home to Petra for $140,000. Petra has saved up $15,000, which she paid to her brokerage as a deposit. The deposit will appear:

(1) as a debit on Petra’s statement and a credit on Valentina’s statement.
(2) as a credit on Petra’s statement only.
(3) as a credit on both parties’ statements.
(4) as a credit on Petra’s statement and a debit on Valentina’s statement.

Answer 19

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Question 20

Assume that it is not a leap year.

A property is sold on the following terms:

Price: $195,000 (cash)
Commission: 5% on the first $100,000 of the sale price and 2 1/2% on the balance

Adjustment, possession and completion date: August 28th
Taxes for the current year were paid by the seller on July 1st in the amount of $1,015 The buyer has paid a deposit of $20,000
Legal fees for conveyance = $491

Where would the tax adjustment appear on the Statements of Adjustment?

(1) as a credit on the Seller’ Statement and a debit on the Buyer’s Statement
(2) as a credit on the Buyer’s Statement and a debit on the Seller’s Statement
(3) as a credit on both statements
(4) as a debit on both statements

Answer 20

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Question 21

Blackacre, a revenue producing property, has been sold. The date of adjustment will be January 31, 1991, exactly 18 months after the contract of purchase and sale was signed and a deposit of $3,500 was paid directly to the seller. If interest on this deposit accrues for the benefit of the buyer, 6% per annum, compounded annually, what will be the amount shown on the seller’s statement of adjustment?

(1) $3,815.00 debit
(2) $3,819.68 debit
(3) $3,815.00 credit
(4) $3,819.68 credit

Answer 21

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Question 22

Vanna has agreed to sell her summer cottage to Pat. Vanna and Pat used the standard Contract of Purchase and Sale on which they agreed to the following dates:

Completion Date: August 31, 1999
Adjustment Date: January 1, 2000
Possession Date: June 1, 2000 Which one of the following statements is true?
(1) There will be no adjustment for real property taxes on the buyer’s statement of adjustments.
(2) If Pat wishes to ensure that any risk to himself due to property damage is insured, he should insure the property as at May 31, 2000.
(3) Neither statement (1) or (2) are true.
(4) Both statement (1) and statement (2) are true

Answer 22

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Question 23

Where a deposit is paid directly to a seller on account of the purchase price:

(1) the amount of the deposit will appear only on the buyer’s statement of adjustments.
(2) the amount of the deposit will appear as a debit on the buyer’s statement and a credit on the seller’s statement.
(3) the amount of the deposit will appear only on the seller’s statement of adjustment.
(4) none of the above statements are true.

Answer 23

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Question 24

Which one of the following statements correctly describes the manner in which taxes are adjusted?

(1) If the seller has already paid the current year’s taxes, the seller must be debited with the taxes from the adjustment date to December 31st.
(2) If the taxes are overdue and a penalty is owing, both the amount of the taxes and the penalty must be apportioned between the buyer and the seller.
(3) If the taxes are not yet due, no adjustment is made until the tax statement invoice arrives.
(4) None of the above

Answer 24

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Question 25

If an item of the buyer’s personal property, such as an automobile, is accepted by the seller as part payment of the purchase price:

(1) the value of the traded property is listed as a credit to the buyer and a debit to the seller.
(2) the value of the traded property will appear on the seller’s statement of adjustments only.
(3) no entry to either statement of adjustments is needed to reflect the trade.
(4) the value of the traded property is listed as a debit to the buyer and a credit to the seller.

Answer 25

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Question 26

Which of the following items would appear on the buyer’s statement of adjustments as debits?

(1) purchase price, legal fees for assumption of mortgage and balance due to complete
(2) deposit paid, buyer’s share of taxes paid and cash proceeds of sale
(3) assumption of first mortgage, deposit paid and balance due to complete
(4) buyer’s share of taxes paid, purchase price and legal fees for assumption of mortgage

Answer 26

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Question 27

Garth has agreed to buy Whiteacre from Elisa for $448,000. Property taxes are not yet due. The taxes last year were $1,324 and the notary public has told Garth to expect a 10% increase in that amount for the current year. The completion and adjustment dates are February 18th. It is NOT a leap year. The property tax amount to be paid by Elisa will appear on her statement of adjustments as a:

(1) debit in the amount of $174.12
(2) credit in the amount of $1,264.87
(3) credit in the amount of $191.52
(4) debit in the amount of $191.53

Answer 27

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Question 28

One or more of the following statements are TRUE:

A. A sellers of real property is responsible for his or her property taxes up to the day before the adjustment date in a contract of purchase and sale.
B. A buyer is usually responsible for legal fees relating to the conveyance and these appear as a debit on his or her statement of adjustments.
C. A brokerage’s real estate commission always appears on the buyer’s statement of adjustments as a credit.
D. Gross mortgage proceeds received by a buyer appear as a credit on the buyer’s statement of adjustments.
E. A tenant’s security deposit appears as a credit on a seller’s statement of adjustments.
F. An existing mortgage assumed by a buyer is a debit on a seller’s statement of adjustments.

Which of the above statements are TRUE?

(1) C and E are true.
(2) A, B, D and F are true.
(3) D, E and F are true.
(4) C and F are true.

Answer 28

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Question 29

Which of the following items would appear on the vendor’s statement of adjustments as debits?

(1) assumption of mortgage, purchaser’s share of taxes paid and discharge of second mortgage.
(2) real estate commission, cash proceeds of sale and sale price.
(3) legal fees for discharge of second mortgage, sales commission and assumption of first mortgage.
(4) assumption of mortgage, purchaser’s share of taxes paid and cash proceeds of sale.

Answer 29

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Question 30

which of the following statements correctly describes the manner in which taxes are adjusted

1. if the seller has already paid the current year’s taxes, the seller must be given a credit for the taxes of the adjustment date to December 31st
2. if the taxes are overdue and a penalty is owing, both the amount of the taxes and the penalty must be apportioned between the buyer and the seller
3. if the taxes are not yet due, no adjustment is made until the tax bill arrives
4. all of the above are correct

Answer 30

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Question 31

which of the following would appear as a debit on the sellers statement of adjustments?

1. the amount of mortgage the buyer will assume
2. the legal fees involved in discharging an adjustment from the sellers title
3. the amount of penalty owing for overdue taxes
4. all of the above would appear as debit on the sellers statement

Answer 31

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Question 32

Which one of the following statements correctly describes the manner in which taxes are adjusted?

(1) If the seller has already paid the current year’s taxes, the seller must be debited with the taxes from the adjustment date to december 31st
(2) If the taxes are overdue and a penalty is owing, both the amount of the taxes and the penalty must be apportioned between the buyer and the seller.
(3) If the taxes are not yet due, no adjustment is made until the tax statement arrives.
(4) none of the above

Answer 32

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