Final Exam Prep Agent Flashcards
Mrs. Jones, an appraiser, is appraising a single family residence for which she has located six closely comparable properties, all sold within the past six months. The subject property is rented for $500 per month. It is a custom-built home, approx. three years old. Mrs. Jones would probably give the most weight in her final estimate of value to which of the following appraisal methods?
- gross rent multiplier
- market data approach
- cost approach
- income approach
-gross rent multiplier
Generally, construction onto the property of another, like a wall fence, building, etc. is known as what?
- encroachment
- easement appurtenant
- situs
- estoppel
-encroachment
Which method would an appraiser be most likely to use when appraising a newly build (1 yr old) apartment building with no rental history?
- Income approach
- Cost approach
- Capitalization approach
- Market approach
-Cost approach
Great approach when theres nothing to compare it to.
When a appraiser is appraising a property he usually considers all of the following except:
- The assessed value
- The property rights to be valued
- a definition of value
- the property identification
-The assessed value
Assess value is for tax purposes thats why the appraiser cant look at the records.
If private property has been damaged (such as through excessive airport noise) of taken by the government without formal eminent domain proceedings, what would a property owner initiate to recover just compensation for losing, or damaging the property?
- Condemnation
- Injunction
- Inverse condemnation
- writ of execution
-Inverse condemnation
The person takes actions against the government
What are the 4 government powers?
PETE Police Eminent Domain Taxation Escheat
The governments right to make laws and regulations for the general welfare of the public is known as:
- police power
- eminent domain
- the bundle of rights
- escheat
-police power
The total collection of rights which may be claimed by private ownership is best described as:
- freehold
- the bundle of rights
- an estate
- the fee simple system
-the bundle of rights
A listing agreement is a:
- unilateral or bilateral contract
- all are correct
- employment contract
- contract to find a buyer for a property
-all are correct
Which of the following would be the best and most complete definition of the term “encumbrance”?
- The use of property by a debtor to offer a creditor security for a debt
- The degree, quantity, nature, and extent of interest which a person has in real property
- Anything which effects or limits the fee simple title to property
- Any action taken relative to property, other than acquiring or transferring title.
- Anything which effects or limits the fee simple title to property
example: easements, liens, mortgages, clouds on title, anything that limits you
What is a variance?
An exception to the rule that will not effect the rest of the community. It cant effect anybody else and you need special circumstances for it.
Redlining is specific to ….
Financing
RESPA would apply to which of the following?
- Homes and residential dwellings only
- 1-4 family residential dwellings
- commercial real estate only
- subdivisions
-1-4 units family residential dwellings
Its primarily there to provide consumers with enough information to enable them to shop for settlement services.
A change in flight pattern that caused a loss of property value would be an example of:
- aviation obsolescence
- physical deterioration
- economic obsolescence
- functional obsolescence
-economic obsolescence
Happens for causes outside your property lines.
A promise in exchange for a promise, supported by consideration, is the basis for a:
- multilateral contract
- unilateral contract
- offer to lease
- valid, binding, bilateral, contract
-valid, binding, bilateral, contract
What are the essentials of a valid contract?
Lawful object
consideration
offer and acceptance
capable parties
without any of these the contract is VOID.
A listing broker has a signed sales contract on a house. The broker then noticed a crumbling wall in the basement. The broker should inform:
- both the buyer and seller
- the seller only
- the buyer, seller and mortgage company
- the buyer only
-both the buyer and seller
Material facts must be disclosed to everyone
What item will appear as a debit on the buyers closing statement?
- none of the other options
- prepaid homeowners insurance
- the purchase price
- unpaid property taxes
-the purchase price
Debit is what you owe and the buyer will definitely see this price of the home on the closing statements
An appraiser examines a building that is 25 years old. Because if the superior upkeep, it has the condition of an 11 year old building. The appraiser may use the 11 year old age as the:
- actual age
- effective age
- numerical age
- physical age
-effective age
Age of the property based upon it condition, not its actual age.
Whats the OR EE Rule?
OR GivOR: Lessor Vendor Optionor Grandor Givor Propertor For your pleasure
EE Receiveeees: Lessee Vendee Optionee Give me Property makes me happy
In some states the instrument used instead of a mortgage is a:
- promissory note
- release deed
- negotiable instrument
- deed of trust
-deed of trust
The primary purpose of a deed is to:
- give constructive notice
- prevent adverse possession
- prove ownership
- transfer title rights
-transfer title rights
deed is evidence of transfer
In a new counter-offer:
- none of the below
- the terms of the offer can never be changed
- the counter-offeror becomes the counter-offeree
- the counter-offeror can change the terms of the offer unilaterally.
-the counter-offeror becomes the counter-offeree
the roles are reversed when a new offer is made
Which of the following would be classified as a general lien?
- mechanics lien
- property tax lien
- judgement
- real estate property tax lien
-judgement
property tax lien and mechanics lien are specific liens. Judgement is a lien on the debtor in general.
Which type of lease requires the lessee to pay a flat rent?
- sandwich/sublet lease
- percentage lease
- gross lease
- net lease
-gross lease
The difference between a freehold and leasehold estate is:
- the right of survivorship for the tenant
- who is obligated to pay the property expenses
- ownership vs the right to purchase
- ownership vs possession
-ownership vs possession
Freehold estates are estates of ownership while a leasehold estate the property owner gives the tenant possession of the property.
A broker accepts an exclusive authorization to sell listing from a corporation. During the listing term, all of the officers of the corporation die. In this case:
The listing remains in full effect bc its a corporation.
If the owner of a shopping center want a major department stores lease to provide rental payments that reflect the stores sales, they most likely to use which of the following types of lease?
- flat fee
- net
- gross
- percentage
- percentage
- net is for selling a home and the sales agent get a percentage off the top of what the house sells form.
A property owner conveys a life estate to his brother for the brothers lifetime and designates his cousin as the person to whom the property will pass when the life estate ends. When the brother dies, what happens to the property?
- the property owner must designate a remainderman
- the property passes to the brothers heirs
- the cousin automatically becomes the fee simple owner of the property
- the property reverts back to the original property owner.
-the cousin automatically becomes the fee simple owner of the property
The property owner named the cousin as the remainderman. On his brothers death, the life estate ends, and the property passes to the cousin.
How big is an acre?
43,560 sq ft
A landowner sells one acre of his 2 acre property to a friend. He reserves for himself an appurtenant easement over the friends land for ingress and egress. The landowners property is:
the dominant tenement
The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the:
loan to value ratio
LTV
For the past 30 years the Seddons continue to operate a neighborhood grocery store. The city council passed a zoning ordinance that prohibits packaged food sales in the area. The store is now an example of:
Non-conforming use
This is an example of “godfathering” thats common when a new zoning rule is put into place. Business that were in compliance b4 the new code was established may continue to operate.
The principal of appraising which states that the maximum value is achieved when the property is in harmony with its surroundings is…
- conformity
- highest and best use
- contribution
- competition
-conformity
The maximum value is realized if the use of the land conforms to existing neighborhood standards.
A buyer, Joe, and a seller, Stephen, both sign a purchase contract. What kind of title interest, is any does Joe have in the property at this point?
- ALTA
- Equitable
- Legal
- Defeasible
-Equitable
The right to posses with the right to get legal title at a later date.
Legal title you get when you have loans paid off and everything’s done.
writ of execution
court order to sell something
A person who has complete control over a parcel of real estate is said to own a:
- life estate
- fee simple estate
- leasehold estate
- defeasible fee estate
-fee simple estate
provides the most control a person can have over their real estate, while the other options have conditions.
life estate-give control only for the duration of his/her life. Defeasible gives control so long as certain things are met.
Discrimination is prohibited in lending practices under which of these acts?
- Equal Credit Opportunity Act
- Real Estate Settlement Procedures Act (RESPA)
- Fannie Mae
- Truth in Lending Act
-Equal Credit Opportunity Act
A normal size section in the Government Rectangular Survey System contains:
- 36 square miles
- 6 square miles
- 1 square mile
- 160 acres
-1 square mile
meridian (north-south line)
baseline (east-west line)
tracts- 6 miles apart called townships
A possessory right or ownership interest in real estate is called an:
- abstract of title
- ad valorem
- estate
- affidavit
-estate
Holographic will is a….
Handwritten will
intestate= no will at death testate= will before death
What does a Cloud on Title mean?
Defect in the title, not clear who owns the property.
example: this happens when a single woman gets married and changes her name.
If title is ownership, what is a deed?
Deed is evidence of a transfer
Promissory note
evidence of the debt
Laches
an unfair delay
Appurtenances
things that run with the land
include easements, minerals, water
-a lease is a personal property``
stigmatized property
a property deemed undesirable because something bad happened there.
Mortgage yield
The interest returns or the profit the lenders make.
Unilateral contract
one-sided contract
ie open listing
What is a 1031 tax deferred exchange?
When you sell a property, you take the money from the old property and put it into the new property, therefore the money doesn’t get taxed.
Panic selling aka blockbusting
A form of discrimination and violates Fair Housing (1968).
Steering-puts people in a box “your those people”
Redlining-deals with loans
Sandwich lease/Sublease
tenant sub-lets the property to a third party
Other forms of leases:
1) net lease-pay for tax, insurance & maintenance )triple net lease)
2) percentage lease- base amount percentage paid on gross receipts
3) gross lease-set amount paid in residential
What’s O.L.D.C.A.R.?
Fundamentals of Agency:Obedience-obey clients lawful instructions
Loyalty-clients best interest ahead of allDisclosure-any info received in the best interest of the client
Confidentiality-keep info confidentAccounting-accounting of money and documentation.
Reasonable Care-certain level of knowledge to guide clients
Helga purchases an investment property in the city for $750,000. In the first year, the property generated an annual cash flow of $75,000, but she sustains a $25,000 tax loss that she can apply against the income of a very successful car wash that she owns. If Helga is in the 35% tax bracket, what is her after-tax cash flow related to the city property?
$35,000. $75,000 (annual cash flow) + $25,000 (tax loss) = $100,000 x .35 = $35,000. After-tax cash flow is calculated by adding back the tax loss to the income and then multiplying by the tax rate. A tax savings is possible when a tax loss can reduce the taxable income of a separate investment.
Paula enters into a contract for the purchase of Jordan’s home. Paula applies for a mortgage. The contract requires her to get a document from her mortgage lender stating that the lender will be loaning her the necessary funds. What is that document called?
A commitment is a document from a mortgage lender stating that the lender will be loaning the purchaser/borrower the necessary funds. The promissory note contains the borrower’s promise to repay the debt and the manner and frequency of payment (e.g., monthly via check). The note also contains the principal balance owned and the interest rate. A letter of approval may refer to a pre-approval letter issued by the lender to show potential sellers that the borrower may be approved for a loan for a particular amount
Trevor owns an apartment building that is 75 years old. He has not performed much maintenance on the building, so the foundation and structural integrity are starting to crumble. As a result, the building’s value has been decreasing. What does that reduction in value refer to?
Depreciation is the loss of value due to a building or property due to any cause, such as deterioration, damage and normal wear and tear. Functional obsolescence means that the property has become inferior to surrounding properties due to technological changes, such as obsolete equipment (e.g., heating system), outdated electrical system or outdated design. External obsolescence refers to changes occurring to land-use in the surrounding area, such as increased traffic, pollution, and zoning changes that affect the permitted use of the property.
Lev owns a home. Francois is a real estate agent who has visited Lev to try to list Lev’s home for sale, but Lev refuses. Lev nonetheless permits Francois to show 3 prospective purchasers his home. Has an agency been created?
An agency by estoppel, which is an implied agency, was created since Lev, the principal, did not stop Francois, the agent, from representing Lev’s interests. An implied agency is formed based on the words or actions of the agent and principal that evidences an intent to form the agency. An express agency is formed through an oral or written agreement. An agency does not necessarily need to be created through a written agreement. A listing agreement is an example of an express agency.
Julie is looking to buy her first home. She locates one and her offer is accepted. Julie applies for a mortgage. She is told that she can deduct her mortgage interest from her income because she has bought a(n) _____________ home.
A qualified home is a primary or main home for mortgage interest deduction purposes.
Ownership of real property for an undetermined length of time is called:
A freehold estate is ownership of real property for an undetermined length of time. A nonfreehold or leasehold estate has a determinable end. An estate is simply an interest in property that provides the right to possess the land.
In order to purchase a home, Darla needs to take out a mortgage. A mortgage is an example of a(n):
An executory contract is a contract that has terms to be completed at a later date. It is not fully performed until all acts required are completed, such as a mortgage. An executed contract is a fully performed contract. A unilateral contract involves a promise to induce the other party to do some act, such as an open listing contract, where the property owner can cancel the listing at any time prior to an agreed upon deal. An implied contract is formed based upon the actions of the parties that evidence an intent to enter into a contract, such as where a seller permits a broker to show a property before any formal agreement is entered into.
Halley owns 25 acres of land in a residential area and wants to develop a real estate complex containing 50 single family homes. What type of mortgage can she obtain that will permit her to pay it off as she sells each home?
A blanket mortgage is a commercial mortgage often used by real estate developers to finance a project. At least two parcels of property are pledged as collateral. The release clause allows the lien to be lifted on particular parcels when a certain amount of the loan balance is paid, such as when a new home is sold and the developer uses the proceeds from the sale to pay off a portion of the Blanket mortgage. PMI is private mortgage insurance, which is not a type of mortgage. It is used when the down payment is less than 20% to insure the top portion of the loan in case of default. An insurance premium is typically added to the monthly mortgage payment. A Pledged Account involves the purchaser placing money in a savings account and using the earned interest to supplement the mortgage payment. With an Open-End mortgage, the mortgagor (purchaser/borrower) is entitled to demand additional loan funds without the need to undergo a new underwriting process.
Another name for an easement is:
An easement, which is a nonpossessory interest in someone else’s land, is also known as a right of way. The property receiving the benefit of the easement is the dominant estate, while the property that is providing the benefit or suffering is the servient estate. An easement in gross is also known as a commercial easement in gross and is typically possessed by governments and utilities for providing services to the public such as electrical lines across another’s property. No easement provides an ownership or possessory interest in the property. It is just a right to use or to restrict use.
The profit realized from the sale of real estate held for 3 years is:
Capital gains represent the profits on a capital investment, such as real estate. The profit realized from the sale of real estate held for 3 years is long term capital gains. Long term capital gains are profits on assets that are owned for more than 12 months. Short term capital gains are profits on assets that are owned for 12 months or less. Profit on long term capital gains is subject to a reduced tax rate and is not taxed as ordinary gross income, but profit on short term capital gains is taxed as ordinary gross income.
Which of the following is not true about the 1988 Amendment to the Fair Housing Act adding protected classes to the law? It added..
- families
- elderly persons
- people w/mental disabilities
- people w/physical disabilities
It added families was not true.
The 1988 Amendment to the Fair Housing act added protected classes to the law. It added families and persons with mental and physical disabilities to the law. Elderly persons were not added to law. However, senior citizen housing is exempt from the Fair Housing Act if it complies with the exemption requirements. By restricting tenants to people 55 and over, an exemption to the Fair Housing Act could apply.
Lanie owns a home in the mountains. If the home’s appraised market value is $540,000 and the loan balance is $135,000, what is the loan to value ratio?
25%
To compute the loan to value ratio, which is the ratio of the loan balance to the property value, you divide the loan balance by the market value. $135,000 / $540,000 = .25, so the loan to value ratio is 25%.
Barbali manages a commercial office building. One of the tenants contacts her to complain about a broken door lock. What type of maintenance is necessary to repair the lock?
Corrective maintenance is repairing something that is already malfunctioning (e.g., fixing a broken door lock). Preventative maintenance refers to inspecting equipment pursuant to a schedule and making repairs when necessary. Property maintenance refers to the overall maintenance of a property.
In Georgia, what can a broker do for a buyer customer, as compared to a client?
In Georgia, how many years do we have to go back to trace the chain perfectly, with no gaps in ownership?
Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?
Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?
Which of the following is an eligibility requirement for a community association manager in Georgia?
Which clause in the deed of trust and Georgia’s security deed is the equivalent of the defeasance clause in the mortgage?
John and Amy purchased a builder’s home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage?
Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?
Barb is a qualifying broker in Georgia. She must ensure that all contracts prepared by her licensees are reviewed ______.
Which of the following may represent an exemption from Georgia fair housing laws?
Which real estate finance instrument in Georgia may include the pledging of collateral and the release of that collateral in the same document?
Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing the home with Stella’s nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?
What factors does the underwriter consider in reviewing a mortgage loan application?
In Georgia, what must be filed for the eviction process to begin?
Which of these is true regarding the Georgia Real Estate Commission’s licensing power?
Stan and Margo want to redevelop an old industrial site in order to create a microbrewery and event space. However, an environmental review found that hazardous chemicals were once used on site, and there is a possibility they will be released during redevelopment. Stan and Margo may not be liable for cleanup, under what federal law?
What makes a binder a valid contract?
?
Property owners may request a conditional use permit or a ______ if a zoning ordinance is enacted. This will provide relief if a zoning regulation deprives an owner of the REASONABLE use of the property.
1) Owner must demonstrate a unique circumstance.
2) Owner must prove that the regulation has caused harm or created a burden.
Variances
Property owners may request a variance or a ______ if a zoning ordinance is enacted.
This is also known as a special use permit and may be granted to the owner to allow a special use of property and must meet certain standards set by the municipality.
Conditional-use permit
such as a church, daycare center in a residential district.
A lot or an improvement does not conform to the zoning use because it existed before the enactment or amendment of the zoning ordinance. Such _______ may be allowed to continue legally as long as it complies with the regulations governing nonconformities in local ordinance, until the improvement is destroyed or torn down, or until the current use is abandoned. If the _____ is allowed to continue indefinitely and would be grandfathered into the new zoning.
nonconforming use
In Private Land Use Controls ______ is like a deed restriction. They are private rules set up by the developer that establish standards for all the parcels within the defined subdivision. Enforced by HOA’s.
Restrictive Covenants or
CC&Rs
Covenants, Conditions & Restrictions
Laches
A right may be lost through undue delay or failure to assert it.
Closing statement
Debits
Credits
Is an accounting of the parties debits and credits.
Debit-a charge, the amount a person owes
Credit-already paid, being reimbursed
Four ways to create a lien, classified how they’re CREATED:
VISE
Voluntary, Involuntary, Statutory, Equitable
Voluntary- intentional (mortgage loan)
Involuntary- no choice (tax lien)
Statutory- created by statute (real estate tax lien)
Equitable-a court ordered judgement
Liens that are classified according to the type of property involved:
General & Specific
General- affect all property real and personal of a debtor, judgements, estate and inheritance taxes, decedents debts, corporate franchise taxes, IRS taxes.
Specific-secured by specific property (vendor liens, mechanic liens, mortgage liens, real estate tax liens, special assessment tax liens)
Subordination agreements
Written agreements that change the priority of liens.
To have VALUE in the real estate market-that is monetary worth based desirability- a property must have the following characteristics…
DUST Demand-need for desire Utility-intended purpose of the property Scarcity- supply Transferability- ownership rights transferrable
Market Value vs Market Price
Market value is the opinion of value based on an analysis of data.
Market price is a property’s asking, offer or sales price.
5 Principles of Value
ACCCH:
Anticipation
Change-real estate is subject to change (fires, eater, tornados)
Competition-supply and demand creates this
Conformity-maximum value is created when a property is in harmony with surroundings
Contribution-a property’s effect on on value
Highest & Best Use-
Amendment vs Addendum
Amendment (like amended tax returns) is a change or modification to the existing content of a contract. ie change to words or provisions.
Addendum (like add) adds new content to an existing contract that may be an addition to the contract. ie agreeing to split the cost of an item in the contract.
Package Loan
Blanket Loan
Open-end Loan
Package Loan-includes real and personal property. Usually include furniture and appliances as a part of the sales loan.
Blanket Loan-Covers more then one parcel or lot, normally for a subdivision. Borrower (partial release clause) can obtain release of a lot by repaying a certain amount of the loan.
Open-end Loan- allows the borrow to go back to the lender and borrow more money. Secures and future advances made by the lender.
According to the Georgia Brokerage Relationships in Real Estate Transactions Act, if no expiration date is provided in the brokerage engagement, then the engagement will terminate ______.
1 year
Exam Tip
If asked what information comes first in a legal description, remember that specific information comes first and general comes next. Same as your home address.
SW 1/2 NW 1/4,
S9, T4N, R5W
same as….
Name
Street Address
City, State, Zip code
Country
What are 3 identifiers in describing a plat in the lot-and-block method?
1) lot and block number
2) name or number of the subdivision plat
3) name of county and state
A private deed restriction can be made ineffective by which of the following? *
A. A ground lease.
B. Conveyance of the property.
C. Voluntary cancellation by at least two of the affected property owners.
D. A conflict with zoning laws.
D. A conflict with zoning laws.
A provision found only in a deed, which subjects the ownership of land to certain restrictions, is called a: * A. covenant. B. condition. C. prescription. D. necessity.
B. condition.
Encroachments are usually discovered by a: * A. title search. B. physical inspection. C. survey. D. recording.
C. survey.
For ten (10) years, Mr. Jones had verbal permission to park a car in Mr. Smith's driveway. Mr. Smith sold to Mr. Johnson. * A. Jones had a license from Smith: Johnson may continue it or discontinue it as he chooses. B. Jones continuous use over ten (10) years has probably created an easement by prescription, leaving Johnson powerless to revoke Jone's right to continue parking in he driveway. C. Smith's permission for Jones to use a portion of the land for a specific purpose created an easement appurtenant that runs with the land. Therefore, Johnson must allow Jones to continue parking in the driveway. D. Jones use of the driveway was a personal easement in gross that ended when Smith sold to Johnson.
A. Jones had a license from Smith: Johnson may continue it or discontinue it as he chooses.
If the right to use another’s property is given orally or informally, its generally considered to be a license rather than an easement.
Easement by prescription is WITHOUT the owners permission.
An encumbrance may be defined as all he following EXCEPT: *
A. anything that affects or limits the fee simple title.
B. the degree, quantity, nature, and extent of interest in real property.
C. rights or interests held by someone other than the fee simple owner of the property.
D. a claim, charge, or liability that attaches to real property.
B. the degree, quantity, nature, and extent of interest in real property.
Which of the following would be a less-than-freehold estate? * A. Life estate. B. Leasehold estate. C. Fee simple estate. D. Fee simple determinable estate.
B. Leasehold estate.
Jim is an electrician who was hired by ABC Construction to install all of the electrical wiring in a new home. Jim began the work on June 10 and completed the work on June 15. The closing took place on August 20. If Jim was never paid by the general contractor and wishes to file a lien, the effective date would be: *
A. June 10, against the property owner.
B. June 10, against the property.
C. June 15, against the general contractor.
D. August 20, against the new home owner.
B. June 10, against the property.
The grantor of a life estate may retain a: * A. reversionary estate. B. less-than-freehold estate. C. remainder estate. D. fee simple estate.
A. reversionary estate.
Which of the following is an estate in land? * A. Easement. B. Lien. C. Encumbrance. D. Lease.
D. Lease.
Estate in land is like saying an interest in land
Statutory liens, which are also specific, include: * A. judgement liens. B. mechanic's liens. C. mortgage liens. D. estate tax liens.
B. mechanic’s liens.
Statutory liens are involuntary liens
Specific liens are mechanics, tax, special assessment, mortgage liens and vendor liens.
judgement is a general lien
mortgage is a voluntary lien
estate tax is a general lien
A phrase used in property law that refers to a title to real property that may have the appearance of having good and valid title to that property, but in reality, the person either does not hold actual title (e.g., adverse possession) or there is a significant defect in the written documents supporting title (e.g., a defective deed) that makes it invalid.
Color of title
An addendum or modification of any kind to a WILL. _____ can alter, change, add to or subtract from the provisions in the will. They can be used to keep a will and testament current and up to date.
Codicil
Remember this is any change to a WILL and not a sales contract.
