Core Concepts Flashcards
One judgement involving multiple licensees
$50K maximum from recovery fund per judgement
An increasing or decreasing discount rate
The Fed’s least effective tool to control cost of credit
In what instance could an agent appeal to District Court of Appeals
If license has been suspended or revoked
What fund is sustained by fines and fees from licensees?
Real Estate Recovery Fund
What world also means corporation for profit?
The word ‘Company’ must be in the business name
What does a temporary incapacitation of license mean?
Mandatory Suspension
What is Liquidation Value Appraisal?
Best used to determine value of a failing business
What happens for unlicensed individuals violating R.E. law?
Cannot be fined monetarily by the FREC
Real Estate Cooperative
Does not involve fee simple ownership
After Probable Cause Panel (PCP) finds probable cause
A Formal Complaint is filed
How are interest rates on conventional., FHA & VA loans determined?
Determined by borrower / lender negotiations
What happens when a licensee terminates employment
Must get a reissue before performing services
What is operating business risk?
Risk income or expenses miss expectations
When would a licensee receive a notice of non-compliance or citations?
Issued for minor infractions of FREC rules
What is charged by lender to increase yield (profit)?
Discount points are charged to make a loan
Sales Associate Compensation
Can only be paid by their broker-employer
Must have active broker’s license
To be an officer or director of a brokerage
Registered name of brokerage
Must appear in all advertising
What happens if Broker doubts disposition of escrow funds?
Must notify FREC in writing
Which properties are exempt from execution of judgment liens?
Homestead property
What must happen when a sales assoc. gets post-dated check as a deposit?
Deliver immediately to employing broker
What is it called when recording deed in the public records?
Constructive Notice
What happens if registration of a brokerage is suspended or revoked?
All sales associates are automatically inactive
Availability of credit is directly related to
Demand for real estate in the market
What is the Fed’s strongest tool to regulate US economy?
Open Market (buying & selling high yielding Treasury Bills
What would happen if a broker failed to split commission as agreed
Can be charged with failure to account
What is it called/would happen if a licensee operated recklessly & carelessly?
Could be charged with culpable negligence
What is the relationship of sales assoc. to broker?
General agency
What does the OTS/Office of Thrift Supervision do?
Federal Agency regulating Savings & Loans
Apartment complex owners can employ
Unlicensed, salaried, on-site leasing agent
Quasi-legislative power of FREC
Allows FREC to adopt rules & regulations
State & Federal No Solicitation phone list
Disallows calls from 8AM to 9PM
What is residential zoning based on?
Density / Population
Real Estate Taxes
Become a lien January 1st of every year
Title Insurance is an expense entry
Never pro-rated on a closing statement
During a hearing a licensee can request what?
Administrative law judge to subpoena witness
What would qualify for cost recovery tax deductions (MACRS)?
Commercial and investment properties
Graduated payment mortgage
Scheduled increases in mortgage payments
What is the legal time to sue for contract enforcement called?
Statute of Limitations
What items can be deducted from Homeowners income tax return?
Mortgage interest & real estate taxes
9% annual Interest plus 6 discount points =
Effective yield 9.75
Executive power of FREC
Can be exercised by chairperson acting alone
What is combining two lots under one ownership called?
Assemblage
What is the Fed. Agency insuring deposit at commercial banks known as?
BIF - Bank Insurance Fund
What could result from failing to record deed?
Estoppel
CCPA/Consumer Credit Protection Act (Reg. Z)
Requires disclosure of true cost of credit with APR
Allodial System
System allowing individual ownership of real estate
How are construction loans are usually disbursed?
By draws as construction progresses
Who usually pays for the intangible taxes on a new mortgagee loan?
They buyer, not the seller
What is true of both VA & FHA 203(b) loans?
May be pre-paid without Penalty
What is unenforceable according to the Statute of Frauds?
Oral R.E. contracts
What is the first step in obtaining a VA loan?
Obtain a certificate of eligibility
What is not required to create a valid, enforceable contract?
Acknowledgement (Notarization)
Mortgage payments are not an Operating Expense is based on the following approach?
Income Capitalization Approach Appraisal
What is the basis for all 3 primary appraisal techniques
Substitution
What is an example of functional obsolescence?
A Florida house without central heat & air
Goodwill of a business
Example of an intangible asset with market value
ANY deposit received by a broker
Should immediately be placed in escrow
In appraising, the word “price” means
Amount of money RECEIVED in a transaction
Assignment allows
Transfer of rights from one to another
Real Estate can be described as
Local in nature
What is entered as a double entry on the closing statement?
Pro-rated real estate taxes
What may be a potential title problem?
Title held by a corporation sole
What is Prima facia evidence that holder is licensed?
Possession of a valid R.E. license
What is a REIT (Real Estate Investment Trust)?
Business trust
What items are all found in a promissory note?
Loan amount, Interest rate, term, payment plan
Economic Soundness (Risk)
Primary consideration of all investments
What is it called when individual ownership of a single unit?
Condominium
What happens when foreclosure funds are insufficient to pay all that is due on the loan?
Lien holder may apply for a deficiency judgment
Who is the mortgagor?
Title holder in lien theory state
What would be a Violation of Sherman-Clayton Anti-Trust Act?
Unaffiliated brokers discussing commission rates
What is a Deed of Trust?
Third party holding title for security
Estate by the Entireties
Terminated by divorce into tenancy in common
Limited partnership brokerage requires
1 or more general and 1 or more limited partners
Tenancy at will
Tenancy without stated termination rights
What is an example of Ostensible partners?
Brokers sharing office without separate signs
What is an easement?
Legal right to enter upon another’s property
What would happen if 1 broker’s license was revoked in office of 4 active brokers?
Only licensee affected is broker who was revoked
What does title transfer require?
Delivery & Acceptance of the deed to & by grantee
General Warranty Deed / Warranty Deed
Defends title against any & all legal claims
What are unliquidated damages?
Damages not specified in the contract
What is an option contract?
Agreement for specified period of time
What is the warrant of quiet enjoyment?
Promise in a deed of no hostile claims
If customer refuses representation, give them
No Brokerage relationship notice before showing
What is the function of the secondary market?
Provides liquidity to primary market
What is required to perform license service after suspension ends?
A reissue is required
What is a clause that benefits the mortgagor?
Prepayment clause
What is hypothecation?
Borrower pledges property as security
Gross lease
Tenant pays rent only, landlord pays the rest
Implied Contract
Contract with terms & conditions inferred
An oral lease creates what kind of tenancy?
Tenancy at will
One broker must be an officer of the corporation
In a registered brokerage corporation
All 4 broker partners want to perform services
All 4 must be actively licensed
What are Highest and Best use appraisals for?
Land & improvements
What occurs if a broker were to close & reopen office in same lic. period?
Requires a reissue if office is in the same location
