Exam Prep Flashcards
When a Florida applicant is upgrading from sales associate to broker, what course must they complete?
A 72-hour pre-licensing course.
Vale can be estimated in the income approach by:
Dividing NOI by the Overall Cap Rate
On what IRS form must details of closing be reported?
IRS 1099 S
On what IRS form are brokers required to report commissions paid to salespersons?
IRS MISC
Real estate term describing the process of converting real property into personal property
Severance
To whom does a tenant or prospective tenant lodge a housing discrimination complaint?
Secretary of HUD
Refers to a provision in the lease that gives the right to the tenant to extend the lease for a given amount of time
Renewal option
By what process is a completely abandoned property returned to the county/state
Escheat
Condition of a property owner who dies without a valid will
Intestate
Condition of a property owner who dies with a valid will
Testate
Right of the government to take private property and use it for the good of the public
Eminent domain
Four powers of the government
PETE
Police Power
Eminent Domain
Taxation
Escheat
Term that refers to a government’s use of their right to eminent domain
Condemnation
When is a comparative market analysis most often used?
Setting the listing price
If a buyer entered a contract with a seller, but wanted to not buy the property, what would happen to the earnest money?
It would go to the seller.
Term for when the board of Zoning Appeals grants someone the ability to construct or improve a property that is not authorized by current zoning ordinance.
Variance
How long do you have to file a complaint with HUD if you believe your rights have been violated under Fair Housing Laws?
1 Year
Describe an exclusive right to sell listing
The listing belongs to the broker
What disclosures does Regulation Z require?
Finance Charge
APR
Amount Financed
Total Payments
What must a Florida deed have to be valid?
It must be signed and witnessed.
To be recorded in the court, it must be notarized
When is does a contract begin to be enforcable?
When it is accepted and mailed back to the buyer
In Florida, if a sales associate does not complete the 14 hours of continuing education requirements prior to the expiration date, what occurs?
The licensee is allowed up to 12 months after the expiration date to complete the 14 hours continuing education and pay the renewal fee.
When will a warranty deed transfer title to a grantee?
When it is delivered and accepted
What type of contract would show the intentions of the parties by their actions?
An implied contract
What type of contract would show the intention of the parties by the specific terms agreed upon in words? (Written or oral)
An expressed contract
What is an Executory contract?
A contract between a debtor and another party under which both sides still have important performance remaining (example: Real estate leases- tenant has to pay rent, landlord has to provide space.)
What is the primary purpose of acknowledgement when a deed is recorded?
To verify that the deed was signed without duress
What is the secondary purpose of acknowledgement when a deed is recorded?
To verify the identity of the party signing the contract
Until pay off, who would hold title when a purchase of a home is financed by means of a trust deed?
Trustee
Are special assessments prorated at closings?
No
What is one manner in which a husband and wife could NOT hold title to their home?
Tenants at will
Tenancy at will
An arrangement in which one party (the tenant) occupies real estate with the permission of the owner, for an unspecified period of time. This is NOT a form of ownership
Tenenacy in common
An estate owned by two or more persons, each of whom as an equal undivided interest (they do not need to be related)
Tenancy by entireties
Form of ownership between a married couple. (Joint tenancy for married people)
Usury
Term used when an interest rate charged is in excess of the maximum rate allowed by law
Subordination
When something is lower in rank and importance, such as the case with a subordination clause which makes other debts in collateral real estate secondary to the claim of the mortgage lender
Puffing
Best defined as non-factual or extravagant statements and opinions made to enhance the perceived desirability of a property
Hedging
Financial technique used in order to reduce or eliminate financial risk.
If a buyer offers to pay the full asking price for a property, but the seller then does not what to sell, is the owner forced to sell?
No, but the owner is liable to the broker for commission
Term for when a title insurance company obtains the policy owner’s legal rights to defend a claim against the title
Subrogation
Assignment
Transfer of rights and interest in a mortgage, lease, etc.
Attachment
When someone’s property is taken into legal custody by a judicial order
If a disabled tenant requests and receives permission from the landlord to make modifications to a rental unit to make it safe and comfortable to live in, is the landlord required to pay for improvements?
No
Can not paying property taxes or assessments result in the sale of property?
Yes
Term for a business that existed before the land was zoned residential by a new zoning ordinance
Nonconforming use
Describe a recorded restriction
Use, with limitations. A restriction is classified as an encumbrance.
What would a violation of a condition result in?
Loss of title, but not necessarily a violation of a restriction
If a person has no living relatives and dies without writing a will, what happens to their property?
It becomes property of the state under the State’s law of Intestate Succession
If someone rents units in an apartment complex for an owner, what type of agent would they be considered?
General agent
When working with a federally-related transaction (FRT), an appraiser must be state licensed or certified if the loan amount is more than:
250,000
What is a Note?
A written agreement that gives evidence of a debt and also states the repayment terms
What is a special agent?
Someone who has authority to represent a principal in a specific transaction.
General Agency
Authorized for a series of transactions or acts of over a continuous period of time. (A good example would be a property manager)
Universal Agency
Power of attorney. Can act in all matters of real estate on behalf of the client
Alienation
Legal term for the transfer of title
Involuntary alienation
When transfer of the title is done without the owners consent or control.
What is the method by which a government can take private property?
Condemnation
Standing trees would legally be considered:
Real property
Crops that require annual planting are called:
Emblements
Is a restriction considered a lien?
No. They are considered non-money encumberances
Foreclosure
the legal process by which an owner’s right to a property is terminated, usually due to default.
When is a contract void?
When it is not legally enforcable
FLorida has mutual recognition with how many states?
8 states
- Alabama
- Arkansas
- Connecticut
- Georgia
- Indiana
- Mississippi
- Nebraska
- Oklahoma
When one spouse solely owns a property, the ownership is:
Owned in severalty
What are homestead rights?
Refer to a property’s protection from judgments for unsecured debts or forced sale by creditors of the homestead owner. Additionally, there may be restrictions on who may receive property in wills and trusts based upon relationship to the homestead owner
What is a trust?
A trust is a legal arrangement in which an individual (trustor) gives fiduciary control of property to a person or institution (trustee) for the benefit of beneficiaries
What is an easement?
the right to use the land of another for a specific purpose. It’s use is limited to that purpose
What is an appurtenant easement?
Benefits the land and can only be used by that land
Deed recordation
Meaning that the recording of the deed provides notice that a conveyance has occurred
Blanket Mortgage
A mortgage which covers two or more pieces of real estate
Wrap Around Mortgage
when a second mortgage is wrapped around the first mortgage
Package Mortgage
Made for an individual property
Open end mortgage
allows for future fund advances by the lender to the borrower
Balloon Payment
associated with a partially amortized loan because it has unpaid amounts of principle left at the end of the term, where as a fully amortized loan has totally paid principle at the end of the mortgage term
Encroachment
When a permanent object from one property extends over onto another property illegally
Encumbrance
Anything that affects the title of a property or limits its use, such as mortgages, judgments, leases, easements, liens, or restrictions
Riparian Rights
rights associated with being located directly next to a flowing water source, like a river or stream
What is the usually penalty for failing to maintain an office and sign at the entrance of an office?
Suspension up to 90 days
When are utility easements created?
Usually at the time of new construction to allow utility companies to maintain cable television/internet/phone, gas, electric, water, sewer, etc.
How many days do credit companies have to let applicants know that they have been rejected?
30 days
Contribution
the principle that claims that an item is only worth what it contributes in value to the whole
Conformity
the proper melding of the uniqueness of the individual property with the character of the neighborhood and the desirability of the market
Substitution
the principle that a knowledgeable buyer will pay no more for one item than for a comparatively equivalent substitute
What is an installment or land contract?
A method of selling real estate whereby the purchaser takes possession and pays for the property in regular installments while the seller retains title until the property is paid for in full.
Condicil
A legal document that changes specific provisions of a Last Will and Testament, but leaves all of the other provisions unchanged
Life estate
an estate whose duration is limited to the life of an individual and a legal arrangement whereby the “life tenant” during his or her life retains use, possession of the property and costs of maintaining the property.
What is a common penalty for the violation of conditions in a deed
Property would return to its original owner
Mortgage
a method of using property (real or personal) as security for a loan
Deed
Is like a bill of sale. It transfers the title. Being like a bill of sale, it can only be used ONCE. A new deed is required every time the title is transferred
Title
A formal legal document that servers as evidence of ownership
A broker that violates the Sherman Anti-trust act could be punished by a maximum fine of:
$1 Million (and 10 years in prison)
Lease
Document that states all the rights of use and the occupancy of the property for a given period of time and given amount of rent
Quitclaim Deed
Provides the grantee the least amount of protection of any deed. There are no express or implied convenants or warranties
Bargain and Sale Deed
Provides the grantee with an implication that the grantor actually does hold title and possession. No other express warranties exist
Special Warranty Deed
Warrants that the grantor does hold title and the property was unencumbered during the time the grantor held title (except when otherwise noted in the deed)
General Warranty Deed
Offers the most protection to the buyer.
Defeasance Clause
gives the borrower the right to redeem title to the property upon payment to the lender of the complete debt obligation
Acceleration Clause
Allows the lender to demand the entire balance of the mortgage loan when the borrower fails to make some installment payments
Alienation Clause
Allows the lender to declare the entire unpaid balance immediately due and payable in the event of a sale or transfer or mortgage property
Escalation clause
allows the interest rate to adjust over the life of a loan
Subordination clause
makes other debts in collateral real estate secondary to the claim of the mortgage
Factors considered in the market or sales comparison approach
- Location
- Time
- Physical characteristics
- Terms of sale
Accretion
When land is actually increased because of water depositing additional soil gradually
Reliction
when the water line recedes and leaves exposed land permanently dry
Avulsion
Sudden loss of land or soil due to a sudden natural act (e.g. earthquake, sudden change in river flow, etc.)
Egress
Means to exit
Latent Defect
Defect that is not easily visible or detectable during a normal inspection
Patent Defect
Defect in which property that is obvious and easily visible
Erosion
The gradual loss of land
Net listing
Agreement where a broker receives as commission any amount above a predetermined minimum sales price(illegal in some states)
Subdivider
Term for someone who buys undeveloped land and divides it unto smaller lots for sale
Doctrine of prior appropriation
Used in areas where water is scares. Use of water is determined and controlled by the local government under doctrine that all water belongs to the public.
Equitable lien
Occurs when there is a claim on goods or property conferred by a court
General Lien
A lien against all property owned by the debtor
Specific lien
a lien against a particular property owned by the debtor
Can a Grant Deed be assigned?
No, a grant deed CAN NOT be assigned.
When there is a new buyer of property, a new grant deed would be drawn up.
Metes and Bounds
metes means distance, bounds means direction
Governmental survey
uses townships (6mi x 6mi).
There are 36 sections in one township and 640 acres in each section
Lot and Block
Method used in subdivisions (subdivided plat)
Would a lessor selling a property terminate a lease agreement?
Why?
No.
When a lessor sells property, the buyer must abide by the existing lease.
When does a broker earn their commission?
When an offer is accepted by the seller
Warrants provided by a special warranty deed
Warrants that the grantor DOES hold title and the property was unencumbered during the time the grantor held title.
3 examples of encumberances
Liens
Easements
Restrictions
What is the ratio that compares the buyer’s gross income to the proposed PITI?
Payment to Income
Hypothecation
Pledging an asset as collateral for a loan
Mortgage release
A release of a mortgage is a document issued by a mortgage lender once a borrower has repaid a loan. It indicates that the borrower now owns the home without any further obligation to the lender
Participation mortgage
mortgage in which a lender shares the income produced from the resale or rental income of the property
Buy down
A lump-sum payment to the lender that reduces the interest payments of the loan
Package mortgage
A mortgage that covers both the real and personal property
Inverse Condemnation
An act property owners may force to receive just compensation if government action has forced a significant loss in value or inability to use the proprety
Open End Mortgage
allows the mortgagor (borrower of the loan) to re-borrow against the principle that has been paid so far.
If a property owner leases space to a tenant, what is the owner’s interest?
Lease fee
Are street addresses used in legal descriptions of real estate?
No.
Street address may change over time.
What does a tenant pay for in a net lease?
maintenance fees, taxes, insurance, etc.
Straight line method
Used when calculating depreciation
3 traditional cost approach methods
Comparative unit method
Unit in place method
Quantity Survey method
Recission
cancels the contract and returns all parties to the way they were before a contract was entered to
Novation
Replacing of something old for something new
Specific performance
a contract that must be fulfilled by parties involved.
Lis Pendens
Latin phrase meaning “suit pending” or “action pending”
Situs
The physical location of a property
Ex parte
means “one side only”, in a legal setting this means that only one side is represented in the matter
Executory contract
A contract not fully performed (usually something remains to be completed by one or more parties)
When would flood insurance be required in order to obtain a loan?
When a property is located in a flood hazard zone
Equitable conversion
Refers to when, after parties have entered into a binding contract for the sale of land, the buyer becomes the “equitable owner” before the delivery of the deed
Perfecting the title
correcting issues with the title
Percentage lease
Has a base rent which is fixed and an excess rent which is commonly based on the percentage of sales
Et Ux
“and wife”
E & O insurance
Errors and Omissions Insurance is business liability insurance for professionals.
Marketable Title
Title that is found to be clear of liens and defects or any other reasonable objection
What percentage of a salesperson’s income must be based on production for him/her to be considered for independent contractor status?
90%
Physical Characteristics of Land
Indestructible nature
Immobility
Non-homogeneity
Economic Characteristics of Land
Situs
Permanence
Scarcity
1968 court case that held up the Civil Rights Act of 1866
Jones v. Mayer
Maximum tax exemption from the homestead exemption
$50,000
The first $25000 applies to all property taxes
How many days after pleading guilty or being convicted and found guilty of any felony must you notify the Florida Commission?
30 days
Once per renewal period, attendance of a FREC meeting will count for how many CE hours?
3 hour continuing education hours
Within what time must an inactive license become active without having to retake the exam in Florida?
2 years
Reconciliation
Provides an analysis of two or more residential property valuations to assist lenders and servicers in reconciling disparate values on specific nonperforming real estate assets
Who is regulation Z controlled by?
Federal Trade Commission
Constructive Notice
Legal presumption that anything recorded in a public record can known by anyone who wants to know it
Actual Notice
Direct knowledge that one has of the property, either by direct inspection, possession, or other means.
Inquiry Notice
information that should impel a reasonable person to make further inquiries about a property
Economic Obsolescence
Occurs when factors unrelated to the property itself and outside of the owner’s control diminish the property
Obsolescence
process or condition of going out of date or being no longer in use
Functional obsolescence
Pertains to a property not complying with recognized utility; in other words, there are features that are not practical or desirable
External Obsolescence
caused by events outside of the owner’s control make the building’s current use nonconforming.
Statute of limitations
Certain limit of time allowed in which parties to a contract may bring a legal action to enforce their rights
How long is a FL broker required to maintain legible records of all transactions, financial records, etc.?
5 years
Rod
1 rod = 16.5 feet
320 rods = 1 mile
If a FL real estate company has more than one broker, who is responsible for the company?
All brokers in a real estate company are equally responsible
Covenant of seisin
The grantor owns the property and has the right to convey title to it. (Seisin means possession)
Unlicensed practice of real estate constitutes what?
A Felony of the Third Degree
Reproduction cost
Dollar amount required to construct an exact duplicate of the subject
Replacement cost
cost to create a building or other improvements which have the same utility as the original
Environmental impact statement
Detailed, full-disclosure report that identifies and analyzes the anticipated environmental impact of a proposed action and discusses how adverse effects will be mitigated.
Common stock ownership
Gives an interest as personal property (stock in a corporation is personal property)
Who funds and provides loans for the Department of Veterans Affairs?
Approved lenders
What is CERCLA? When was it passed?
CERCLA established prohibitions and requirements concerning closed and abandoned hazardous waste sites.
It was passed in 1980
What is RESPA
RESPA: Real Estate Settlement Procedures Act
Mandates certain disclosures in connection with the real estate settlement process AND prohibits certain unlawful practices by real estate settlement providers (like kick backs and referral fees)
Judgment Lien
Occurs when a court order puts a lien on personal and/or real property in order to pay a debt
Mechanics Lien
Specific lien placed by a contractor, laborer, etc when they performed work in the improving or repairing of a property
Statutory lien
Lien created by statute (law). Common example is a real estate tax lien.
Assemblage
Refers to the combining of two or more parcels into one ownership or use
Plottage
Refers to the value of the combined sites having a total value higher than that of each parcel
Formula for figuring the value using the Gross Rent Multiplier
Value = Market Rent x GRM
Compare a license to an easement
A license, unlike an easement, is having the permission of the owner to enter his land for a specific purpose.
Unlike an easement, the license can be rescinded at any time.
