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Real Estate > National Chapter 5 > Flashcards

National Chapter 5 Flashcards

1
Q

intentional misrepresentation of a material facts for the purpose of gaining an unfair or dishonest advantage over another person

A

active fraud

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2
Q

intentional nondisclosure of a material fact

A

passive fraud

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3
Q

3 types of agency relationship

A

express, implied, agency ratification and estoppel (ostensible)

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4
Q

what is the essence of agency relationship?

A

trust, confidence, and mutual good faith

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5
Q

what is an agency relationship based on?

A

authorization and mutual consent

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6
Q

When is commissioned earned?

A
  1. broker has produced a ready, willing, able buyer
  2. buyer has signed an offer to purchase
  3. seller has accepted the offer
  4. both buyer and seller have received signed copies of the agreement
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7
Q

principal federal statute that covers competition and is one of the most important pieces of antitrust legislation

A

Sherman Antitrust Act

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8
Q

collusion between or among members of a particular trade to maintain prices at a set level

A

price fixing

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9
Q

agreements between or among members of a particular trade that would prevent other members from fair participation in the trade’s activities

A

group boycotting

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10
Q

agreements between or among members of a trade to avoid doing business in specific market areas

A

market allocation

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11
Q

arrangement that requires a buyer to purchase additional or unrelated products or services when making a product purchase

A

tie-in arrangements

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12
Q

made both substantive and procedural modifications to the federal antitrust law

A

Clayton Antitrust Act

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13
Q

under the Clayton Act, private individuals are permitted to sue antitrust violators and, if successful, can recover _x the damages incurred plus court costs and fees

A

3

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14
Q

has the power to judge whether particular trade practices are unfair

A

FTC

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15
Q

most common form of the agency relationship

A

seller agency

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16
Q

may be created by a written agreement or it may be created by words/actions

A

subagency

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17
Q

exists when a real estate firm or licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction

A

dual agency

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18
Q

broker may designate 1+ licensees to act exclusively as the agent of the seller/landlord, and designate 1+ licensees to act exclusively as the agent of the buyer/tenant

A

designated agency

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19
Q

agent can represent only 1 party in a single transaction, but never both - all other parties to the transaction are customers

A

single agency relationship

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20
Q

if the agent enters into an agency with the seller

A

seller’s agent

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21
Q

if the agent enters into an agency with a buyer

A

buyer’s agent

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22
Q

legally binding contract that creates and agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction

A

listing agreement

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23
Q

3 common types of listings

A

open, exclusive right to sell, exclusive agency

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24
Q

3 types of buyer agency agreements

A

exclusive buyer agency, exclusive-agency buyer agency, open buyer agency

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25
Q

the 2 most common changes in a listing agreement are

A

price changes and listing period extensions

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26
Q

only the _ can initiate an action or file a suit against a seller or buyer to receive a commission -

A

broker

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27
Q

clause in a listing agreement that says that the broker is still entitled to a commission for a set period of time after the listing expires, if the property is sold to a prospect that the broker introduced to the property

A

carryover or safety clause

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28
Q

agreement between 2+ parties who, in a “meeting of the minds” have pledged to perform or refrain from performing some act

A

contract

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29
Q

meets the legal requirements for validity

A

valid contract

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30
Q

agreement that does not meet the tests for validity and therefore is no contract at all

A

void contract

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31
Q

one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability

A

voidable

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32
Q

requires that certain contracts must be in writing to be enforceable

A

statute of frauds

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33
Q

termination of a contract may occur for any of what reasons

A

performance, infeasibility, mutual agreement, operation of law

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34
Q

restricts the time period for which an injured party in a contract has the right to bring a lawsuit against the other party

A

statute of limitations

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35
Q

breach of contract gives the damaged party the right to take legal action in one of which ways

A

rescission, forfeiture, suit for damages, suit for specific purpose

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36
Q

contract in which the buyers agree to purchase a property for a certain price and the sellers agree to convey title to the buyers using a deed or an assignment of lease

A

purchase and sale agreements

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37
Q

bilateral agreement between a seller, the vendor, and a buyer, the vendee, in which the vendor defers receipt of some or the entire purchase price of a property over a specified period of time

A

installment sales contract

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38
Q

enforceable contract in which a potential seller, optionor, grants a potential buyer, optionee, the right to purchase a property before a stated time for a stated price and terms

A

option to buy

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39
Q

right of a person to have the first opportunity to purchase or lease a property

A

right of first refusal

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40
Q

both an instrument of conveyance and a contract between parties to uphold certain covenants and obligations

A

lease

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41
Q

transfer by a tenant of a portion of the leasehold interest to another party

A

sublease

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42
Q

transfer of the entire leasehold interest by a tenant to a third party

A

assignment of the lease

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43
Q

requires the landlord to pay the property’s operating expenses, including utilities, repairs, and maintenance while the tenants only pay rent

A

gross lease

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44
Q

tenant pays rent and maintenance and operating expenses, such as taxes, insurance, utilities and repairs

A

net lease

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45
Q

rent payments start at affixed amount but increase as the lease term matures

A

graduated lease

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46
Q

concerns the land portion of a real property - owner grants the tenant a leasehold interest in the land only, in exchange for rent

A

ground of land lease

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47
Q

lease whose rental is based on a percentage of the monthly or annual gross sales made on the site

A

percentage lease

48
Q

conveys a leasehold interest to an owner of a co-op

A

proprietary lease

49
Q

provides for the adjustment of rent according to changes in a price index

A

index lease

50
Q

hired to perform certain acts, but the broker cannot control how the salesperson performs those acts

A

independent contractor

51
Q

real estate firms engage in 2 types of advertising

A

institutional and product

52
Q

attempts to establish a positive image of the company, its services and its reputation in the minds of the public - sometimes called corporate ads

A

institutional ads

53
Q

directed toward the particular properties a company has for sale

A

product ads

54
Q

time-tested method for writing good ads

A 
AIDA
A - attention
I - interest 
D - desire 
A - action
55
Q

what is the main purpose of real estate advertising?

A

reach the largest number of probable prospects

56
Q

What does truth in lending prohibit?

A

bait and switch ads

57
Q

advertising property or credit terms for a property that an agent does not intend to sell or that is actually not available just to attract buyers for other properties the agent has for sale

A

bait and switch ads

58
Q

what is the single most important decision to make when listing a home for sale?

A

the listing price

59
Q

a listing agent helps the seller set a realistic selling price by considering

A

seller’s wishes, market conditions and timing of the sale

60
Q

what is one of the most important tasks a licensee needs to perform with the seller-client?

A

market analysis of what the property is worth

61
Q

earnest money is AKA

A

trust account money

62
Q

deposit usually made in the form of a check, to show evidence of the buyer’s intention to carry out the terms of the contract in good faith

A

earnest money

63
Q

when is earnest money provided?

A

the offer to purchase real estate is made

64
Q

requirements for an escrow account

A
  1. must be non-intreat bearing
  2. sponsoring broker may maintain 1+ escrow accounts
  3. must be maintained at a federally-insured depository
  4. all licensees should give earnest money checks to their sponsoring brokers immediately
  5. earnest money must be deposited by the next business day of contract acceptance
65
Q

illegal act when a real ersatz licensee places client or customer funds with their own personal funds

A

commingling

66
Q

once the purchase offer has been accepted, what process begins?

A

closing

67
Q

seller is required to deliver what at closing?

A

marketable title

68
Q

who should have title insurance?

A

buyer and lender

69
Q

insurance policy may be issued to a lender only, a buyer only or jointly to lender and buyer

A

standard title insurance

70
Q

insures against many of the items excluded in the standard policy

A

extended coverage

71
Q

process in which a disinterested third party holds all money and docs relating to the transaction until all of the terms and conditions of the escrow instructions have been satisfied

A

escrow

72
Q

oversees the prep and recording of all the legal docs, prorates the settlement costs, preps the settlement statements and does various other tasks

A

closing agent

73
Q

what is the most common type of property insurance?

A

homeowner’s

74
Q

clause that requires the homeowner has insurance that is equal to 80% of the home’s replacement value

A

coinsurance clause

75
Q

what is not inlaced in a basic homeowner’s policy

A

flood insurance

76
Q

requires that the parties to certain transactions receive the correct figures pertaining to their closing costs

A

RESPA

77
Q

what purchases does RESPA apply to?

A

residential property, involving 1st or 2nd mortgages, and financed by a federally related loan

78
Q

What does RESPA specially prohibit?

A

kickbacks

79
Q

What does RESPA require lenders to use?

A

closing disclosure

80
Q

details the costs that the buyer and seller will pay at closing

A

closing disclosure

81
Q

debit

A

money buyer/seller need to pay

82
Q

credit

A

money buyer/seller will receive

83
Q

when did fair housing laws begin?

A

with the civil rights act of 1866

84
Q

list of protected classes of the federal fair housing act

A

race, religion, color, sex, national origin, handicap, familial status

85
Q

How long does someone have to file a complaint with HUD if they believe they have been discriminated against

A

1 year from the alleged act

86
Q

in addition to or instead of filing a complaint with HUD, a person may file in a state or federal court within how many years of the alleged violation?

A

2 years

87
Q

mandates that a person with disabilities have equal access to jobs, public accommodations, government services, public transportation and telecommunications

A

ADA - Americans with Disability Act

88
Q

making a profit by inducing owners to sell by telling them that persons of a protected class are moving into the neighborhood which will have detrimental results

A

blockbusting

89
Q

channeling homebuyers toward to away from homes in certain neighborhoods in order to preserve or alter the makeup of that neighborhood

A

steering

90
Q

restricting the number of loans in certain areas of a community because of its racial or ethnic makeup

A

redlining

91
Q

administration of rental or other property by a person or a team of people who are acting for the owner

A

property management

92
Q

a PM has dual responsibility to whom?

A

the owner and the tenants

93
Q

real estate broker who manages properties for one owner or a number of owners

A

individual property manager

94
Q

manages a singel large property

A

individual building manager

95
Q

manages and lives on property

A

resident manager

96
Q

acts as the property owners’ agent and adviser for the property

A

real estate asset manager

97
Q

employment contract for a PM

A

management agreement

98
Q

what is the PM’s first responsibility?

A

to realize max profit on the property that is consistent with the owner’s instructions

99
Q

3 types of budgets for each rental project a PM should establish

A

operating, capital reserve, and stabilized budget

100
Q

3 types of maintenance

A

preventative, corrective, construction

101
Q

schedule of planned maintenance actions aimed at the prevention of breakdowns and failures

A

preventative maintenance

102
Q

repair or replacement of compounds which have failed or broken

A

corrective maintenance

103
Q

remodeling, interior redecorating, or new capital improvements

A

construction maintenance

104
Q

It is critical for a PM to know how to market what effectively?

A

the space available for rent

105
Q

PM report should include

A

monthly and annual account statements and delinquent account reports

106
Q

what are the 2 major classes of property?

A

residential and nonresidential

107
Q

include single-family homes and multiple -family properties such as apartments, condos, and co-ops

A

residential properties

108
Q

broken down into 5 major subcategories

A

nonresidential properties

109
Q

5 major categories of nonresidential properties

A

commercial, industrial, agricultural, recreational, and institutional

110
Q

commercial real estate can br broken down into what subcategories?

A

office buildings, retail space, hotels/motels

111
Q

commercial buildings can contain both office and retail space and some can contain residential space - this is known as

A

mixed use development

112
Q

important reasons why. business would choose to lease space instead of purchase

A
  1. leasing can be more cost effective
  2. owning a building would reduce the flexibility of the business
  3. engaging in leasing, repairing, and maintaining extra building space could cause the business to lose focus on its major business activities
  4. if the business wanted to downsize, the building owner would have to find someone to use or purchase the excess space
113
Q

a particular building’s potential for generating income depends on what 2 factors?

A

ability to attract tenants to rent space and expense involved with the building’s operation

114
Q

term used to the net income produced by a specific property after all expenses have been deducted from the gross receipts

A

NOI

115
Q

what affects NOI?

A

market rent, vacancies and both fixed and variable operating expenses

Real Estate (19 decks)

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