Ky Real Estate Test Ch 6 Flashcards
D: Auction
The process of selling both real and personal property in which oral bids are taken and the property is sold to the highest bidder.
When real property is auctioned, the auctioneer must either have a license to sell real estate or must work with a real estate broker.
D: Builder’s Warranty
Builders often offer warranties to purchasers that assure the buyer that the builder will return to make repairs as needed for a period of time.
Warranties should be in writing for the protection of all parties, but builders sometimes give oral warranties.
D: Court Supervised Foreclosure
Under Kentucky law, a mortgage must be enforced through a legal proceeding.
That legal proceeding is referred to as a court supervised foreclosure.
D: Disclosures Stigmatized property
Property where something has happened that does not affect the structure or land, but gives the property a “bad reputation.”
For example, a house where a murder has occurred, where a registered sex offender has lived, or one that purportedly has a ghost.
D: Foreclosure
The process used to enforce a mortgage when the mortgagor fails to repay the money as agreed.
This process terminates the owner’s and all lien holder interests in the property.
D: Megan’s Law
This is the sex offender registration law.
Someone who has been convicted of one of a number of sex related crimes must register as a “sex offender” once they are released from prison.
When he/she changes residences, he/she has notification requirements that are outlined in Megan’s Law.
D: Property Conveyance Act
This refers to KRS 324.162 of the license law and is sometimes referred to as the “stigmatized property law.”
Under this statute, licensees are not required to disclose information not required by the licensing law or other applicable state or federal law.
The KREC has interpreted this to mean that licensees are not required to disclose information that is not material and that is not required by law.
For example, if a murder has been committed in a house, the licensee has no duty to disclose that information unless the prospective purchaser asks a specific question about the murder.
Disclosure of murder is not required by any statute, state or federal.
D: Seller’s Disclosure of Property Condition Form
The form, required by the licensing law, must be presented to the seller by the real estate agent who expects to be paid in the transaction.
Sellers are asked to either complete the form with information about the property condition and to sign it once completed, or to sign the form indicating they do not choose to complete the form.
If the seller refuses to complete and sign the form, that fact must be made known to prospective buyers.
Buyers are also asked to sign the form indicating they have received a copy of it.
D: Single Family Residential
A property that is designed and built to house one family unit.
The structure may be a detached single family dwelling, or an attached dwelling (example: duplex, townhouse, or condominium).
Explain Seller’s Disclosure of Property Condition form
AKA: Seller’s Disclosure Form
The form is required only in single family residential transactions when a licensee is being compensated.
Although sellers are required by Kentucky case law to disclose information about property they are selling, the license law only requires the form when single family residential property is involved.
Owners who choose to market their property without the assistance of a licensee are not required to use the form.
The form has to be delivered to the seller, but the seller is not required to complete the form.
There is specific timing required for the completion and delivery of the form.
For listed property, the form must be completed by the seller at the time of the listing or similar agreement.
Occasionally, the seller will not “list” the property, but will instead enter into another type of compensation agreement which the license law refers to as a “similar agreement.”
The form must be furnished by the listing licensee to any prospective buyer, or the buyer’s agent, upon request.
If the buyer or buyer’s agent does not request the form, it shall be delivered to the buyer, or his agent, within 72 hours of the listing licensee receiving a written and signed offer to purchase.
At the time of delivery, the licensee should request the buyer’s signature.
If, however, the buyer refuses to sign the form, the licensee should make a note of the refusal and keep it in the principal broker’s files.
If you are a member of a REALTOR® board, you may have access to this form in the MLS system, in that case you wouldn’t need to request the form from the listing agent.
The statute does not require the seller’s disclosure be used in single family residential sales when the house is new construction and a builder’s warranty is offered, when the property is sold at auction, or when it is sold by a court-supervised foreclosure.
Although not required with new construction, a prudent licensee may want to ask the seller to complete the form if the seller is not giving a “written” warranty.
Explain In situations where the seller is not listing the property, but is agreeing to compensate the buyer’s agent, the agent must deliver the seller’s disclosure
to the seller and ask that it be completed.
If the seller completes the form, it must be delivered to the buyer within 120 hours (five days) after the contract is entered into between the seller and buyer.
Once the form is delivered to the buyer, the agent must request the buyer to sign the form.
If the buyer refuses, the agent should sign the form, evidencing the buyer’s refusal.
True or False
Sellers are required by law to complete the Sellers Disclosure form.
False
Sellers have the option of completing the form or not completing it. The licensee is required to deliver it to the seller.
True or False
Seller’s Disclosure forms are exempted with auctions and court supervised foreclosure properties.
True
These are two of three exemptions.
True or False
When a buyer’s agent is selling a For Sale by Owner, the licensee is not required to deliver the Seller Disclosure form to the seller.
False
The buyer’s agent is required to deliver the form and the seller has the same options as a listed owner.
True or False
Buyers are required to sign the Seller Disclosure form.
False
The buyer should be requested to sign the form and if he/she refuses, the refusal should be noted on the licensee’s file copy.
True or False
The Seller Disclosure form must be delivered to the buyer within 120 hours.
False
The Seller Disclosure form must be delivered to the buyer at the buyer or buyer’s agent request, or within 72 hours of the listing agent receiving a written and signed offer to purchase.
True or False
The listing agent must deliver the Seller Disclosure form to the seller at the time of the listing.
True
In the event the compensation agreement is not a listing contract, the form still must be delivered to the seller at the time of signing the agreement.
True or False
The Sellers Disclosure of Property Condition form should be used in all residential transactions.
False
The Sellers Disclosure of Property Condition form is only required for single family residential transaction. Watch the word “all.” “All” is one of those words like “always” and “never” that could lead you to wrong answer on the licensing examination.
True or False
Licensees must only disclose what they “know” about a property.
False
Licensees must disclose what they “know” and what they “should know” about property.
True or False
There is an exemption from the delivery of the Seller Disclosure form when the property is new construction and the builder gives a written warranty.
False
The exemption is for any builder warranty – it does not have to be a written warranty.
True or False
Licensees should make a visual inspection of the property when listing and showing it.
True
Although licensees are not property inspectors, they should take time when listing and showing property to make a visual inspection.
If the seller chooses not to complete the Seller Disclosure form, he may sign it in the section that states:
“AS SELLER(S) I/WE REFUSE TO COMPLETE THIS FORM AND ACKNOWLEDGE THAT THE REAL ESTATE AGENT WILL SO INFORM THE BUYER.”
the seller may decide not to either complete or sign the Seller Disclosure form. In this event the licensee signs the form after the statement that reads:
“THE SELLER(S) REFUSE(S) TO COMPLETE THIS FORM OR TO ACKNOWLEDGE SUCH REFUSAL.”
When can a licensee complete the Seller Disclosure form?
he must have written authorization from the seller
How is the hold harmless wording reads in the Seller Disclosure form?
THE LICENSEE NAME HERE (______________) HAS BEEN REQUESTED BY THE OWNER TO COMPLETE THIS FORM AND HAS DONE SO. I HEREBY AGREE TO HOLD HARMLESS THE NAMED LICENSEE FOR ANY REPRESENTATION THAT APPEAR [sic] ON THIS FORM.”
D: the Hold Harmless agreement on the Seller Disclosure form.
Means that the seller agrees not to sue the agent or file a KREC complaint against him/her them for any misrepresentations on the form.
The seller is also agreeing to defend the agent and pay any damages incurred by the licensee if someone files a suit or a KREC complaint against the licensee for incorrect information on the form.
Although the seller agrees to hold the agent harmless, a prudent agent will never complete this form.
Explain Condominium Seller’s Certificate
A licensee who is involved in the brokerage of a condominium transaction shall advise the client in writing of the client’s right to receive the Condominium Seller’s Certificate.
And the purchasing client’s right to void the sales contract.
Anytime an agent is involved in the sale of a Condominium they should be sure the Buyer and Seller are both made aware of this provision.
The notice about the Condominium Seller’s Certificate is also included in the Seller’s Property Condition Form.
That should serve as a reminder to all licensees that the Condominium Seller’s Certificate is also required on all condominium transactions.
The listing licensee may complete the Seller Disclosure of Condition form if the
A. seller agrees to pay the licensee for the service.
B. buyer asks for the information and the seller refused to complete it.
C. seller agrees to hold the licensee harmless from claims.
D. seller refuses to complete the form.
C. seller agrees to hold the licensee harmless from claims.
A prudent licensee should never complete the Seller Disclosure of Property Condition form.
Under Megan’s law licensees
A. should assist their clients in speaking to the sheriff’s department to get up-to-date information.
B. are required to have language in their contracts that outline the procedures that registered sex offenders must follow.
C. have no duty to inform their clients and customers where registered sex offenders live.
D. must inform their clients and customers how to locate the state police web site for the sex offender registry.
C. have no duty to inform their clients and customers where registered sex offenders live.
Licensees have no duties relative to Megan law and should not take on responsibilities that will be lead to liabilities if they make a mistake.
The Seller Disclosure of Property Condition form must be kept by the principal broker for
5 years
The Sellers Disclosure of Property Condition form contains the
A. buyer’s acceptance of the seller’s warranty.
B. sellers warranty of condition.
C. seller’s observations and knowledge about the property.
D. listing licensee’s observations.
C. seller’s observations and knowledge about the property.
Buyers should not be told that the Sellers Disclosure is a warranty. It is not a warranty and buyers should protect themselves with property inspections.
What is the heading for numerical paragraph 3 on the Sellers Disclosure of Property Condition form?
A. Sewer System.
B. House Systems.
C. Construction/Remodeling.
D. Building Structure
D. Building Structure
A property where a murder has occurred is known as
Stigmatized
What is the item requested in numerical paragraph 11(c) on the Sellers Disclosure of Property Condition form?
Was the house built before 1978?
KRS 207.250 specifically states this is not a material fact that licensees must disclosure, and disclosure would violate the fair housing laws.
If the seller refuses to complete the Sellers Property Condition form, that refusal must be made known to the
Buyer
The notice to the buyer alerts them that the seller chose not to complete the form.
