Exam 1: Definitions Exam 7

Question 1

The gross rent multiplier is developed by dividing the
A)
gross monthly income by the market value.
B)
gross monthly income by the assessed value.
C)
sales price by the gross monthly income.
D)
gross monthly income by the sales price.

Answer 1

sales price by the gross monthly income.

Question 2

Recording a deed
A)
gives actual notice.
B)
transfers title.
C)
raises presumption of delivery.
D)
insures possession.

Answer 2

raises presumption of delivery.

Question 3

Regarding interest rates on home loans, all are incorrect EXCEPT
A)
interest is adversely affected when there is more money available for home loans.
B)
the interest on the note is augmented through the use of the mortgage loan discount points to increase the effective yield.
C)
as the loan is reduced, the interest rate is proportionately reduced.
D)
interest is paid in advance.

Answer 3

the interest on the note is augmented through the use of the mortgage loan discount points to increase the effective yield.

Question 4

Which of the following would be most indicative of the purchasing power of the consumer's U.S. dollar?
A)
Price indices
B)
Discount rate
C)
Gold standard
D)
Treasury bill

Answer 4

Price indices

Question 5

Which criterion would NOT be used to determine net income for an income property?
A)
Management fees
B)
Mortgage interest
C)
Maintenance costs
D)
Vacancies

Answer 5

Mortgage interest

Question 6

Broker Wilson has an exclusive authorization and right to sell Jameson’s property. What is Broker Wilson’s obligation with respect to the offers?
A)
Must present both written and verbal offers until agency is terminated
B)
Is required to present only offers which are in writing
C)
Can discontinue presenting offers when seller had signed and accepted an offer
D)
Is required to present offers which are received after the agency has terminated

Answer 6

Must present both written and verbal offers until agency is terminated

Question 7

A broker placed advertisements on his or her listings as follows. Which of these would come under the provisions of the Truth-in-Lending law?
A)
“3 bedrooms, den, $25,500, E-Z terms”
B)
“4 bedrooms, family room, owner will help finance”
C)
“2 bedrooms, large lot, nothing down”
D)
“3 bedrooms, 1 bath, $21,000, excellent GI-FHA financing”

Answer 7

“2 bedrooms, large lot, nothing down”

Question 8

A termination date is necessary in all of the following EXCEPT
A)
open listing to sell a residence.
B)
exclusive authorization and right to sell.
C)
exclusive authorization to secure a loan.
D)
exclusive agency authorization to sell a business opportunity.

Answer 8

open listing to sell a residence.

Question 9

The period for which an improvement is worth maintaining is defined as its
A)
state of depletion.
B)
productive life.
C)
economic life.
D)
earning period.

Answer 9

economic life.

Question 10

Who may withdraw funds from a broker’s trust account?
A)
Any licensed employee working in the broker’s office
B)
An unlicensed employee, who has a fidelity bond and is given written permission by the broker to withdraw money from the trust account
C)
An officer of the corporation
D)
Anyone employed by a broker

Answer 10

An unlicensed employee, who has a fidelity bond and is given written permission by the broker to withdraw money from the trust account

Question 11

The method of appraisal that bases the "present market value or the property on the anticipated future benefits of ownership in dollars and discounting them to a present worth, at a rate that is attracting purchase capital to similar investment" is known as
A)
market data.
B)
cost analysis.
C)
none of these.
D)
capitalization.

Answer 11

capitalization

Question 12

The Housing and Financial Discrimination Act of 1977 prohibits discrimination in lending by financial institutions based on the character of the neighborhood in which the property is located. With regard to the law, all of the following are correct statements EXCEPT
A)
the law applies to loans for single-family residences and duplexes, owner occupied only.
B)
the law applies to rehabilitation loans for fourplexes, not owner occupied.
C)
the law is administered by the Secretary of Business and Transportation.
D)
the law calls for damages not to exceed $1,000.

Answer 12

the law applies to loans for single-family residences and duplexes, owner occupied only.

Question 13

In the planning and engineering of a tract for subdivision purposes, a "cul-de-sac" is frequently employed. This term is in reference to the installation of
A)
recreation areas.
B)
sewage disposal.
C)
drainage.
D)
streets.

Answer 13

streets

Question 14

Most buyers elect which type of title insurance policies?
A)
Extended coverage
B)
ALTA
C)
Standard coverage
D)
ATA

Answer 14

Standard coverage

Question 15

A property is sold under an installment sales contract that the vendee recorded. Later the vendee defaults without executing a release document. The vendor, to remove the cloud from his title, may
A)
petition the county recorder to remove all evidence of the documents from the records.
B)
bring a quiet-title action in court.
C)
do none of these.
D)
execute a quitclaim deed.

Answer 15

bring a quiet-title action in court.

Question 16

Taylor, Hughes, and Kent each owns a 1/3 undivided interest as tenants in common in a 640-acre farm. Hughes leases his interest to Jones for five years without the knowledge and consent of Taylor and Kent. In these circumstances, all of these statements are correct EXCEPT
A)
the lease is valid between cotenant/lessee and cotenant/lessor.
B)
the lease is invalid between cotenant/lessee and cotenant/lessor.
C)
Hughes could lease his 1/3 interest without the consent of Taylor and Kent.
D)
the lessee has an equal right of possession of the entire farm with the other cotenants.

Answer 16

the lease is invalid between cotenant/lessee and cotenant/lessor.

Question 17

A roof that slopes upward from all four sides and is joined at the ridge is called a
A)
mansard roof.
B)
gable roof.
C)
hip roof.
D)
gambrel roof.

Answer 17

hip roof.

Question 18

A percolation test is used to determine
A)
capacity of soil to absorb water.
B)
size of the cistern needed for a given building.
C)
depth of footings.
D)
quantity and potability of water.

Answer 18

capacity of soil to absorb water.

Question 19

Broker Wilson sells a house, and a loan for the buyer is secured through a savings and loan association. Wilson carefully explains all loan costs to the buyer. According to the Real Estate Settlement Procedures Act (RESPA), which statement is TRUE?
A)
Broker Wilson must provide the buyer with an estimate of settlement costs within one week.
B)
The lender must provide an estimate of settlement costs to the buyer immediately.
C)
The lender must provide the buyer with an estimate of settlement costs within three days.
D)
Broker Wilson would not have to provide an estimate of settlement costs to the buyer because he had explained all costs.

Answer 19

The lender must provide the buyer with an estimate of settlement costs within three days.

Question 20

Which loan costs are NOT required to be disclosed as a finance charge to the customer under federal truth-in-lending rules?
A)
Finder's fees
B)
Time-price differential
C)
Credit investigation
D)
Buyer's points

Answer 20

Credit investigation

Question 21

A quitclaim deed releases present claim, rights, and title of the
A)
servient tenement.
B)
property.
C)
grantor.
D)
grantee.

Answer 21

grantor.

Question 22

A lessor is renting a furnished apartment from period to period. Under the Fair Housing Act, the lessor may do all of these things EXCEPT
A)
obtain credit checks on married couples.
B)
require only single tenants to have a co-signor for the lease.
C)
collect the first, second, and last month’s rent.
D)
check with former landlords for references.

Answer 22

require only single tenants to have a co-signor for the lease.

Question 23

A deed to an unlocated easement is
A)
valid.
B)
void for lack of certainty.
C)
void.
D)
invalid.

Answer 23

valid.

Question 24

In an operating statement, taxes and insurance would be
A)
operating expenses.
B)
fixed expenses.
C)
miscellaneous expenses.
D)
variable expenses.

Answer 24

fixed expenses.

Question 25

A lessee may be justified in abandoning a rented dwelling if there is constructive eviction by the landlord. All of these would be constructive eviction EXCEPT
A)
unwarranted delays by the landlord after notice to make repairs of damages that have made the property unfit for occupancy.
B)
condemnation of the entire property in eminent domain proceedings.
C)
an eviction notice is tendered by the landlord.
D)
failure of the landlord to repair excessive wear and tear to property caused by the tenant.

Answer 25

failure of the landlord to repair excessive wear and tear to property caused by the tenant.