Module 6 Flashcards by Chelsea Iannaccio

Under Federal Truth-in-Lending Laws, which of the following are not included in the statement of the annual percentage rate?
 A) Loan Fees
 B) Service fees
 C) Points
 D) Attorney's fees

D) Attorney’s Fees

Attorney’s fees are not included to calculate the APR but it is shown as a budget item on the Good Faith Estimate.

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The Truth-in-Lending Law is part of the Consumer Protection Act.
A) True
B) False

A) True

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The Good Funds Act was designed to aid which of the following?
 A) Property management companies
 B) Escrow and title companies
 C) Mortgage brokers
 D) Real Estate attorneys and brokers

B) Escrow and title companies

The Good Funds Act requires all checks to clear the banks before the transaction can be recorded

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House on the Hill advertisement violated which laws when it stated "no down payment at 102 Hill Street"?
 A) Regulation Z
 B) RESPA
 C) TILSRA
 D) FHA/VA

A) Regulation Z

Regulation Z requires more disclosures when certain terms are used in the ads.

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Under Regulation Z of the Truth-in-Lending Act, which of the following items may be individually expressed in a newspaper ad without requiring a complete disclosure of the other required items?
 A) The amount of the down payment
 B) The monthly percentage rate
 C) The number of payments
 D) The annual percentage rate

D) The annual percentage rate

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Truth-in-Lending (Regulation Z):
A) Regulates the amount of closing costs lenders can charge
B) Discloses out-of-state sellers
C) Discloses APR, finance charges, amount financed, and total payments
D) Regulates the interest rate that lenders can charge

C) Discloses APR, finance charges, amount financed, and total payments

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Under the Residential Landlord Tenant Code, an eviction would be considered to be retaliatory if the tenant was evicted for:
A) Using the premises for illegal purposes
B) Complaining of health hazards to the Building Department
C) Damaging the premises
D) Failing to pay rent

B) Complaining of health hazards to the Building Department

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In the Landlord Tenant Code, all claims for security deposits have to be settled in small claims court.
A) True
B) False

A) True

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The amount of deposit under the Landlord Tenant Code which a lessee may pay:
A) Cannot exceed one month’s rent for humans and additional one month’s rent for pets
B) Is considered to be the property of the lessor during the term of the lease
C) Both of the above
D) None of the above

A) Cannot exceed one month’s rent for humans and additional one month’s rent for pets

The rent cannot be increased because of family size being larger or for a pet damages.

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If a tenant has complied with all terms and conditions of his lease, the landlord must return his security deposit within what period of time after termination of the rental agreement?
 A) 24 hours
 B) 72 hours
 C) 14 days
 D) 25 days

C) 14 days

The deposit must be returned within the 14 days with an explanation of all deductions and estimates for repairs.

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When a tenant does not maintain a unit, the owner can do which of the following?
A) Physically remove the tenant
B) Change locks when the tenant is not home
C) Remedy the defect and charge the tenant
D) All of the above

C) Remedy the defect and charge the tenant

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A tenant tells his landlord that there is a leak in the roof and the landlord does nothing. This constitutes:
 A) Constructive eviction
 B) Actual eviction
 C) Demand eviction
 D) None of the above

A) Constructive eviction
Constructive eviction terminates the lease and the tenant must move out. The living conditions must constitute a safety hazard for constructive eviction to take place.

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In times of inflation, who suffers the most from rent controls?
 A) The tenant
 B) The tax authorities
 C) The investor/owner
 D) None of the above

C) The investor/owner

Hawaii does not have rent controls. If there was rent control, the landlord would not be able to raise the rent to keep up with inflation and rising costs and market increases.

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How many days does the buyer of a residential leasehold have to review and accept or reject the terms of the lease?
 A) 5 days
 B) 10 days
 C) 15 days
 D) 30 days

B) 10 days
The owner must provide the leasehold documents within 10 days of acceptance of the Purchase Contract and the owner must pay for the fees to obtain the lease documents.

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What is true regarding most properly-drawn property management agreements?
A) The manager obtains an exclusive listing to sell at any time
B) It defines the rights and obligations of the owner and the agent
C) Both of the above
D) None of the above

B) It defines the rights and obligations of the owner and the agent

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A property manager is a:
 A) Special agent
 B) General agent
 C) Both of the above
 D) None of the above

B) General agent
A general agent may be an apartment property manager, who has the authority, to advertise for tenants, enter in to leases, collect rent, evict, and all activities related to his job

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A broker acting as a property manager should place into a neutral escrow depository or client trust account:
 A) Rent
 B) Security deposits
 C) Both of the above
 D) None of the above

C) Both of the above

The agent cannot commingle his company funds with the trust fund.

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A property manager would establish a market survey system in order to:
 A) Establish rents
 B) Establish expenses
 C) Determine net operating income
 D) Establish accounting procedures

A) Establish rents

Rents is controlled by the market conditions whereas other expenses are dictated by vendors providing the services.

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When a broker signs a contract to manage an owner's property, he becomes a:
 A) Lessor
 B) Trustee
 C) Receiver
 D) Fiduciary

D) Fiduciary

A fiduciary agency relationship is between the agent and the principal.

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A real estate salesperson may manage property only if:
A) She has a managing agreement in writing with the owner of the property
B) She has at least two years experience
C) She has a property management license
D) She is under the control and supervision of her broker

D) She is under the control and supervision of her broker

A salesperson is always under the supervision of the employing broker.

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Under the Hawaii Landlord Tenant Code, the:
A) Maximum security deposit is equal to two months’ rent
B) Landlord must give the tenant a 24-hour notice to enter the property
C) Landlord must give the tenant at least a 30-day notice to vacate on a month-to-month tenancy
D) Tenant must give the landlord a 28-day notice to vacate property on a month-to-month tenancy

D) Tenant must give the landlord a 28-day notice to vacate property on a month-to-month tenancy

A tenant giving a 28 day notice to vacate is obligated to pay the rent for the full 28 days even if the tenant moves out earlier.

If the landlord fails to have the unit ready for the tenant at the beginning of the agreed upon term, all of the following are true EXCEPT that the:
A) Tenant does not have to pay rent during the time he may not move in
B) Tenant may terminate the rental agreement at any time during that period
C) Landlord may recover the costs of finding another tenant
D) Tenant may recover reasonable costs to find another place to live

C) Landlord may recover the costs of finding another tenant

The tenant is in default only for failing to pay rent on time. In Hawaii, how much written notice is a landlord required to give the tenant to pay overdue rent prior to terminate the lease?
 A) 0 days
 B) 3 days
 C) 5 days
 D) 10 days

C) 5 days

If the owner of the leased fee interest offers to sell the leased fee, in a condominium in Hawaii, who has the right of first refusal to purchase it?
A) Board of directors of the association of apartment owners
B) Hawaii Housing Authority
C) Any buyer who can come up with the money
D) Any U.S. citizen

A) Board of directors of the association of apartment owners

An owner or lessee may submit his or her property to the condominium property act and it will become a condominium by the terms of the act when: A) The final report is issued B) All the units have been sold C) The certificate of completion is issued by the appropriate county official D) The declaration is recorded

D) The declaration is recorded The Declaration, By-Laws and the building plans are recorded at the Bureau of Conveyances and the building becomes a condominium under HRS 514A.

``` What defines the ocean boundary of a property in Hawaii? A) U.S. Coast Guard B) A Certified Surveyor C) Vegetation line D) Tide mark ``` The vegetation line to the ocean becomes state owned property even though legal title still belongs to the landowner

C) Vegetation line The vegetation line to the ocean becomes state owned property even though legal title still belongs to the landowner

``` Two properties, one in the regular system and one in the Land Court, have been consolidated and will be sold as one property. This is known as: A) Cannot be done B) Has to be sold as Land Court C) Double System D) Ohana Dwelling ```

C) Double System | The property will have two recording stamps on the documents and will pay double the recording fee.

``` Broker Yuri asked Salesperson Zoe to research a property at the Real Property Tax Office and provided the following Tax Map Key (TMK): /00I Plat; /0II Zone; /III Section; /0IV Parcel. In which sequence should Zoe use the above description to reach the property? A) II, I, IV, III B) II, III, I, IV C) III, II, I, IV D) III, IV, II, I ```

B) II, III, I, IV | The largest section to smallest is: Division, Zone, Section, Plat, Parcel, CPR.

``` What information can be derived from the tax map key (TMK) number? A) Property location B) Owner's name C) Square footage of lot D) Tenancy ```

A) Property location | The TMK number gives you an indication of where the lot is located.

``` In connection with metes-and-bounds descriptions, official markers on the property used to determine elevations are called: A) Metes B) Monuments C) Bench marks D) Encroachments ```

C) Bench marks

``` The boundary lines of land with their terminal points and angles are called: A) Bench marks B) Geodetic survey points C) Metes and bounds D) Longitude and latitude ```

C) Metes and bounds

``` Persons most apt to use a monument in their profession would be: A) Lawyers B) Carpenters C) General contractors D) Surveyors ```

D) Surveyors

``` The method most frequently used to determine value for a fire insurance policy is: A) Market data B) Replacement cost C) Income D) Declining balance ```

B) Replacement cost

``` Physical deterioration most nearly means: A) Obsolescence B) Wear and tear C) Repair D) Recapture ```

B) Wear and tear

``` An owner appeared at the public hearing concerning construction of a new storage facility for hydrogen gas to be erected near his home. He objected to the project on the basis that the value of his property would be lowered substantially. His fears are based on the concept of: A) Functional obsolescence B) Physical obsolescence C) Capital depreciation D) Economic obsolescence ```

D) Economic obsolescence Economic obsolescence occurs on surrounding land that may be detrimental to the subject lot.

The highest and best use of property reflects: A) The best annual return in a bad location B) The plottage value C) The highest value consistent with the neighborhood D) The "before and after" method

C) The highest value consistent with the neighborhood | This is potential value and not current value

``` To estimate value of property using direct sales comparison approach (CMA), an appraiser would rely on the market behavior of: A) Insurers B) Buyers and sellers C) Brokers D) Lenders ```

B) Buyers and sellers | When there is a lot of sales activity in a given area, the fair market value is easier to determine.

``` In appraisals, the three approaches to value are: A) Capitalization, market data, income B) Cost, income, reproduction C) Cost, replacement, income D) Replacement, income, market data ```

D) Replacement, income, market data There are various names for the 3 methods of appraising. The other 3 answers have duplicate answers.

``` A 5-bedroom house with only one bath is considered to exhibit which of the following? A) Economic obsolescence B) Poor design C) Functional obsolescence D) Physical deterioration ```

C) Functional obsolescence

``` The cost approach to appraisal: A) Must equal the income approach B) Reflects physical and functional deterioration C) Both of the above D) None of the above ```

B) Reflects physical and functional deterioration The cost approach deducts the depreciation of the building over time and does not reflect the possible increase in market value.

When using the capitalization approach and trying to find net income, you use operating expenses to deduct from gross income but exclude mortgage expenses (debt service) and depreciation. A) True B) False

A) True

``` What is not usually acceptable for appraisal comparisons? A) Estate sales B) Foreclosure sales C) Both of the above D) None of the above ```

C) Both of the above Estate sales and Foreclosure sales may indicate a discount in the sale of the property and appraisers do not use these properties as comparables.

``` When determining the highest and best use, all of the following would be considered, EXCEPT: A) Zoning B) Initial purchase price C) Set back D) Size of lot ```

B) Initial purchase price Initial purchase price has no impact on the highest and best use. An owner could have overpaid at the height of the market or gotten a steal at the bottom of the market and it will not matter on the highest and best use of that property.

``` If a buyer makes an investment in real property and wishes to recover his investment over a period of time, he would use: A) The capitalization method B) The replacement method C) A recapture rate D) A recovery rate ```

C) A recapture rate The recapture rate indicates the percent of the cash flow that is allocated towards rebuilding the structure when the building becomes unusable in addition to the return of investment.

``` Given the annual income, what is the best method to determine property value? A) Capitalization method B) Comparison method C) Replacement method D) Summation method ```

A) Capitalization method

``` What is the gross multiplier when the house sells for $75,000 and has a gross monthly rental of $700.00? A) 8.9 B) 0.112 C) 107.0 D) .009 ```

A) 8.9

An appraiser finalizes value estimates at which of the following stages of appraisal? A) When he gathers, records, and verifies the data B) When he performs direct sales comparisons C) When he analyzes and interprets data D) When he reconciles the data

D) When he reconciles the data The most important part of the appraisal process is when he reconciles the data to arrive at a range of value for the subject property.

In order for a licensed appraiser to appraise property that is going to be sold, you need: A) A minimum of 2 years experience actively working for an appraiser B) A college degree or 120 hours of approved instruction C) To be state certified D) To have completed four consecutive appraisal courses

B) A college degree or 120 hours of approved instruction

For a 15-year-old single-family residence that is in a neighborhood with many recent sales, the appraisal method best used is: A) Land residual value and reproduction cost B) Market data from recent sales of comparable properties C) Capitalization and reproduction costs D) Capitalization and replacement costs

B) Market data from recent sales of comparable properties

``` What is the difference between reproduction costs and present property value? A) Appreciation B) Depreciation C) Market value D) Book value ```

B) Depreciation | This is known as the cost approach.