Contracts

Question 1

A Deed must:

Answer 1

Legally describe the property being conveyed

Question 2

Principle of Substitution

Answer 2

States that a buyer will pay no more for a property than the cost of an equally desirable (& comparable) alternative property.

Question 3

A father needed money to send his son to college. He borrowed enough money from the bank to pay off his existing loan & have enough for his son’s college. Later, he sold his home subject to the 1st Trust Deed & took a 2nd Trust Deed as part of the purchase price. In the event of Default on both Trust Deeds, what would be true?

Answer 3

The Bank could obtain a Deficiency Judgement against the father.

Question 4

What are the 3 ways a fiduciary relationship may be terminated:

Answer 4

1. Revocation
2. Death
3. Agreement

Question 5

Meaning of Revocation in Real Estate relationship

Answer 5

is an official cancellation of an agreement or business relationship b/w parties.

Question 6

A property located at 147 James St., Any City, Your State, which is near the corner of Broadway & 3rd Ave & measures 140’ x 200’ is

Answer 6

A physical description

Question 7

A Standard Title Insurance Policy will insure against:

Answer 7

Forgery in the chain of title.

Question 8

A Standard Title Policy Insures primarily:

Answer 8

Against defects in title which are discoverable through an examination of the public record.

Question 9

A Subordination Clause:

Answer 9

is very often used in the purchase of Raw Land by a Builder. And is of primary benefit to the borrower (builder).

Question 10

Which 4 Characteristics are req’d to esta. Value in Real Estate? (D-U-S-T)

Answer 10

Demand
Utility (Use)
Scarcity
Transferability

Question 11

An Agency Relationship, such as in a listing, may not be termination method:

Answer 11

Revocation by the Principal if the Agent has an interest in the Subject matter of the Agency.

Question 12

An Appraiser has been requested to appraise a Residential home. Although the home is actually 10yo it is in excellent condition, so the Appraiser places its age at 6yo. This would be know as:

Answer 12

Effective age.

Question 13

What is an “Assignment of Rents” Clause in a Deed of Trust?

Answer 13

Puts teeth in the Lender (Beneficiary)’s Security Interest by giving it the right to collect rents directly from the tenant if you (Trustor) default on the mortgage pymts.

Question 14

Trustor, Trustee, & Beneficiary in Real Estate

Answer 14

The Borrower (Property Owner) is named as “Trustor”, the Lender is called the “Beneficiary”, & a 3rd party is called a “Trustee”. The Trustor grants the property “in Trust w/ power of sale” to the Trustee to secure pymt to the Beneficiary. In theory, Title to the property is conveyed to the Trustee.

Question 15

An Executrix is appointed by the:

Answer 15

Deceased

Question 16

Define Executrix

Answer 16

A Female Executor of a Will.

Question 17

At the time of Real Estate contract is entered into by a Married Couple under the age of 18, it is considered to be:

Answer 17

Valid

Question 18

Avulsion is:

Answer 18

The sudden detachment or tearing away of the Land by action of the water

Question 19

Developer Stone is thinking of building a Neighborhood Shopping Center. The population concentration need for the area is”

Answer 19

5K to 10K

Question 20

Discount points paid for the loan would affect the:

Answer 20

Interest Paid on the Loan

Question 21

Disregarding down pymts, which of the following Loans req’s the Lowes Escrow charges?

Answer 21

Cal-Vet

Question 22

During an Open Escrow, when must the Termite Report be delivered?

Answer 22

At least 5 Days before Closing of Escrow

Question 23

What is Economic Obsolescence?

Answer 23

EO is the loss of Value resulting from external (Outside property line) economic factors to an asset or group of assets.

Question 24

Funds used to finance the CA Veterans Farm & Home Purchase Program comes from:

Answer 24

State Bonds

Question 25

Generally, Franchisors raise most of their funds from:

Answer 25

Financing from Banks & Insurance Companies, together w/ money from the Sale of Stock & Service Fees from Franchisees.

Question 26

If compensation is paid to a Short Sale Negotiator or Broker, the compensation:

Answer 26

Should be disclosed to all parties in the Purchase Agreements, the Escrow Instructions, & the HUD 1 Closing Statement (or Uniform Settlement Statement)

Question 27

If you are asked to figure the Net Worth of a Business, you would treat an “Account Payable” as:

Answer 27

A Liability.

Question 28

If you were called upon to list a property that was owned by an Unincorporated Association, you would”

Answer 28

Check the By-Laws or Governing Docs.

Question 29

Implied Covenants are not normally included in a:

Answer 29

Quitclaim Deed.

Question 30

Example of Implied Covenant in Real Estate:

Answer 30

Marketable Title (i.e. No major defects w/ the Title)

Question 31

What is a Quitclaim Deed?

Answer 31

is a special type of deed used to transfer Real Estate w/out making guarantees about title to the property.

Question 32

Impounds are

Answer 32

Reserves; is set up by the mortgage lenders to pay certain property-related expenses.

Question 33

In a Standard Title Policy, what is not considered a normal procedures?

Answer 33

The determination of the amt. of insurance coverage.

Question 34

In absence of a will (Intestate), the separate property of the Decedent is divided among the Surviving Spouse & 2 Children:

Answer 34

1/3 to Surviving Spouse & 2/3 to the Children.

Question 35

In making a decision to issue a Standard Title Insurance Policy, a title insurance company is most concerned w/”

Answer 35

The Trustor.

Question 36

In Real Estate financing, reference is sometimes made to Take-Out Loans. This refers to:

Answer 36

Long Term Loan take-out after construction.

Question 37

In the Appraisal field of Real Estate, there are many ways an Appraiser can arrive at a Capitalization Rate (Cap Rate). Which of the following could be used to determine a Cap Rate?

Answer 37

The Band of Investment Theory.

Question 38

What is the Band of Investment Theory (Method):

Answer 38

is a technique in which the Cap Rates attributable to components of the Capital Investment are weighted & combined to derive a weighted avg. rate attributable to the overall investment.

Question 39

What is Compound Interest?

Answer 39

Results in Interest being calculated not only the Original Principal but also Interest on the Accumulated Interest.

Question 40

Liquidation of an Obligation most nearly means:

Answer 40

Amortization

Question 41

Mr. Dunn purchased his home from Mr. Spring using Seller Carry-Back Financing. Later, Mr. Kirk bought the property Subject to the Loan. If Mr. Kirk immediately defaulted, Mr. Spring:

Answer 41

May not get a Deficiency Judgement b/c it was a Purchase Money Loan.

Question 42

What is Purchase Money Loan (Mortgage) or Seller/Owner Financing?

Answer 42

Is a Loan given to the Buyer from the Property Seller.

Question 43

What is correct concerning a Deed of Trust & Note?

Answer 43

The Trustor to Beneficiary relationship is not a fiduciary relationship but merely that of a Borrower & Lender.