Deck 3

Question 1

safe harbor test

Answer 1

In order to qualify as an independent contractor, the IRS requires what’s called the safe harbor test to establish that a person is truly acting as an independent contractor and not an employee.
The person must be a qualified (properly licensed) real estate agent.
- Compensation paid to the real estate agent for services performed must be based on production, not
hours work.
- A written agreement must exist between the independent contractor and the broker.

Question 2

The Six Elements Required of a Valid Contract

Answer 2

“CCM LIC”

1. Competent parties
2. Consideration
3. Mutual Agreement
4. Lawful Objective
5. In Writing and Signed by the Parties
6. Contain a Legal Description

Question 3

express contract

Answer 3

An express contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing.

Question 4

implied contract

Answer 4

An implied contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.

Question 5

rescission

Answer 5

Discharging a contract by mutual agreement is called rescission.

Question 6

the Statute of Limitations to sue for breach of contract in real estate

Answer 6

4 YEARS

Question 7

Suit for specific performance

Answer 7

an attempt to force the defaulting
party to comply with the terms of the contract.

Question 8

Issues involving licensee non-disclosure to third parties is known as…

Answer 8

the law of torts. Tort is a civil wrong or wrongful act, whether intentional or accidental, that the law recognizes as grounds for a lawsuit.

Question 9

Universal Agency

Answer 9

In a universal agency relationship, the principal empowers the agent to perform any and all actions that may be legally delegated to an agency representative. The instrument of authorization is the power of attorney.

Question 10

General Agency

Answer 10

General agency relationships exist between the broker and his or her salespeople. This agency relationship is created with an independent contractor agreement.

Question 11

injunction

Answer 11

An injunction is a court action by property owners to enforce covenants.

Question 12

Doctrine of Laches

Answer 12

The Doctrine of Laches states that if a property owner is lax in protecting his or her rights, the property owner may lose those rights.

Question 13

use variance

Answer 13

A use variance gives permission to use the land for a purpose not allowed by the current zoning.

Question 14

area variance

Answer 14

An area variance permits an applicant to vary one or more of the dimensional or physical requirements of the applicable zoning law, code or ordinance in connection with some proposed construction.

Question 15

Estate at sufferance

Answer 15

tenancy against landlord’s will and without an agreement

Question 16

Encumbrances

Answer 16

non-possessory interests limiting the legal owner’s rights.

Question 17

Easements

Answer 17

a right to use portions of another’s property.

Question 18

Easement in gross

Answer 18

a right to use property that does not attach to the real estate. Utilities or railroads are examples. Those employed to buy or sell easements in gross must be licensed or registered with TREC.
- personal: not revocable or transferable; ends upon death of easement holder
- commercial: granted to businesses; transferable

Question 19

Easements can be created by..

Answer 19

voluntary grant, court decree by necessity or prescription, or eminent domain.
 by prescription: obtainable through continuous, open, adverse use over a period

Question 20

Easements can be terminated by…

Answer 20

release, merger, abandonment, condemnation, change of purpose, destruction, or non-use.

Question 21

If a single party owns the fee or life estate, the ownership is an…

Answer 21

estate (ownership) in severalty.

Question 22

Tenancy in common

Answer 22

Tenancy in common is the most common form of co-ownership when the owners are not married. Co-tenants share an indivisible interest in the estate. All tenants in common have distinct and separable ownership of their respective interests.

Question 23

joint tenancy

Answer 23

In a joint tenancy, two or more persons collectively own a property as if they were a single person. Rights and interests are indivisible and equal. Each has a shared interest in the whole property which cannot be divided up.

Question 24

Common interest developments (CIDs)

Answer 24

Common interest developments (CIDs) are developments characterized by the individual ownership of either a housing unit or parcel coupled with the right to use shared common areas and facilities.
Common interest developments in California are:
 Condominiums
 Planned unit developments (PUDs)
 Cooperatives
 Timeshares

Question 25

Planned unit developments (PUDs)

Answer 25

Planned unit developments (PUDs) share many of the same characteristics of condominiums except one major difference: Planned unit development owners own the land where their unit is located, not just the air space around the unit.

Question 26

cooperative

Answer 26

In a cooperative, or co-op, the person owns shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as its principal asset. Along with this stock, the shareholder acquires a proprietary lease to occupy one of the apartment units.

Question 27

Devisee

Answer 27

The term for a person who is the receiver of real property by will is known as a devisee.

Question 28

When a loan is secured by a borrower’s residence, a prepayment penalty is not allowed after:

Answer 28

7 years.

Question 29

homestead exemptions head of household? disabled or 65+? all others?

Answer 29

The law permits the wife to declare a homestead exemption on 1) her separate property 2) the husband’s separate property and 3) the community property – all without the signature or consent of her husband. The “head of the household” exemption is $75,000; for disabled or persons 65 or over, the exemption is $100,000; and for all others $50,000.

Question 30

: The court action used to evict a tenant who is in default is known as:

Answer 30

Unlawful detainer action or action in ejectment is the legal remedy to remove a tenant who defaults on the rent or refuses to give up the premises.

Question 31

: If a company or individual has ownership of a mortgage and then transfers ownership to another company or individual, this is called a(n):

Answer 31

assignment

Question 32

Hypothecation

Answer 32

The act of using property to secure a loan while at the same time retaining the use and benefit of the property is called hypothecation.

Question 33

A tenant is excused from paying rent in the event of fire or casualty damage and the landlord receives uninterrupted income while the premises is unusable by means of:

Answer 33

Rent-loss insurance covers a landlord for lost rent in the event of casualty damage while the premises is unusable. Also the tenant is excused from rent for this period.

Question 34

A brother and sister hold title to real property as joint tenants. The sister gets married and deeds half her interest in the property to her husband. Her husband:

Answer 34

When a joint tenant conveys a portion of his interest, the joint tenancy is not affected insofar as the original remaining joint tenants are concerned. They continue as joint tenants to each other with the “stranger” holding as a tenant in common. However, when, as in this case, the remaining joint tenants no longer have an equal interest in the property, the joint tenancy is dissolved and it becomes a tenancy in common.

Question 35

Art and Bud are partners. Art dies and leaves all of his estate to Charlie. Which of the following is correct?

Answer 35

Charlie has the right to Art’s share of the assets of the partnership but no right to the management of the business

Question 36

During an open escrow, when must the termite report be delivered?

Answer 36

At least 5 days before closing of escrow

Question 37

A remainder is when:

Answer 37

When a life estate ends and there arises future interest in any person other than the grantor, the residue of the estate is called a remainder. Future interest

Question 38

Present worth and future benefits of property are concerned with:

Answer 38

appraised value.

Question 39

What is the statute of limitations on filing an action for encroachment?

Answer 39

If not filed within 3 years from date of knowledge, his right to sue outlaws.

Question 40

A general agent has full authority to:

Answer 40

Bind the principal to all agreements

Question 41

The Street Improvement Act gives a property owner _______ to pay the special assessment tax before it goes to bond.

Answer 41

He may pay all, part, or none of it within 30 days.