OR-NAT Flashcards
After entering into a contract, an inspection revealed that the property has extensive roof damage. The seller declined to fix it, so the parties agreed to cancel the deal. What is this an example of?
** Mutually rescinding the contract**
In this example, the parties mutually rescinded the contract as a means of remedying the situation.
- Accepting liquidated damages
- Accepting partial performance
- ** Mutually rescinding the contract**
- Unilaterally rescinding the contract
June and Joel are considering two properties. One is a townhome and one is a condominium. Which of the following is a primary difference between the two?
** Condominium owners do not own the land beneath their units.**
Condominium owners do not own the land beneath their unit, but townhome owners do. This is one reason why it’s so important to know the difference between these two types of properties
* Condominium owners do not own the land beneath their units.
* Condo owners pay association fees, while townhome owners do not.
* The square footage is different.
* Townhome owners do not own the land beneath their units
Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?
* Easement by prescription
* Easement by prescription
* Easement in gross
* Express easement
* Visible easement
Easements by prescription are created through continuous, exclusive, and long-term use of another’s
property without actual permission
A property was sold using a general warranty deed. Which one of these statements is true?
* The buyer is the grantee.
The grantor is the former owner, and grantee is the new owner. Property may only be conveyed if both
(all) owners agree to convey it
- Either the buyer or the sellers can convey the property.
* The buyer is the grantee. - The buyer is the grantor.
- The sellers are the grantees.
Which of these tasks must a licensee perform for buyer clients?
** Ensure that the buyer receives copies of all signed paperwork.**
** Ensure that the buyer receives copies of all signed paperwork.**
- Advise the buyer on how to get the seller to come down on the asking price.
* Ensure that the buyer receives copies of all signed paperwork. - Explain to the buyer how to deposit the earnest money into the seller’s personal checking account.
- Explain to the buyer that there’s really no need to review transaction documents because they’re all standard.
Making sure your clients receive signed paperwork is your responsibility. Both parties should receive copies of signed paperwork.
Nevina may be creating an implied agency agreement if she does which of these?
* Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area.
Any time a licensee performs tasks that are usually part of an agency agreement, there’s a risk of creating an implied agency relationship.
- Contacts a mortgage broker to find out what first-time homebuyer programs are available.
- Gives her neighbor MLS listing information for another neighborhood home that’s on the market.
* Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area. - Speaks to a local civic club about the homebuying process.
Which of these statements about the Superfund Amendments and Reauthorization Act (SARA) is true?
* Landowners who perform due diligence when purchasing a property, including a Phase I site assessment, may be immune from liability if the property is found to be contaminated.
Based on SARA, landowners aren’t responsible if they didn’t know the property was contaminated when purchased, if they did their due diligence when investigating the property, and if they acted responsibly when the contamination was discovered
- Buyers who are evaluating a commercial or industrial real estate purchase must have an environmental impact statement performed to ensure that no contamination exists on the property.
* Landowners who perform due diligence when purchasing a property, including a Phase I site assessment, may be immune from liability if the property is found to be contaminated. - Landowners who purchased a property after any contamination occurred can’t be held responsible for the contamination.
- No matter what the circumstances are, SARA places liability on the current landowner for the cleanup of any contamination.
Which of the following is NOT a characteristic of a corporation?
* Corporations are tangible and nontaxable.
Corporations are conjured by law. Corporations don’t physically exist, as in bricks, mortar, or even people. Corporations are intangible and taxable
- Corporations are recognized legal entities.
* Corporations are tangible and nontaxable. - Corporations are taxable.
- Corporations have tax rates separate from individual tax rates.
Sam was putting up a basketball hoop by his driveway when one of the officers of the homeowners association walked by. “I’m so sorry,” she said, “but you’ll have to take that down. Basketball hoops in direct view of the street are prohibited.” What is in place in Sam’s subdivision that would prohibit this?
* CC&Rs
Developers manage the visual and aesthetic details of a given neighborhood through covenants, conditions, and restrictions (CC&Rs)
* CC&Rs
* Deed warranty
* Law
* Regulation
What is a principal meridian?
* A north-south line used as a reference point in the rectangular survey system
** A north-south line used as a reference point in the rectangular survey system**
- An east-west line used as a reference point in the rectangular survey system
* A north-south line used as a reference point in the rectangular survey system - The center-most section identified in the rectangular survey system
- The center-most township identified in the rectangular survey system
The north-south line that runs through the initial point is a true meridian (called the principal meridian). There are 37 principal meridians, which are referred to when distinguishing between the various surveys
A deed states, “For love and affection, the receipt and sufficiency of which is hereby acknowledged.” 7What does this statement represent in the deed?
* Consideration
Consideration (something of value) is required for transfer of this deed. In a traditional sale, the consideration is the purchase price stated in the deed. In deed transfers, “for love and affection” may be the consideration offered
* Consideration
* Granting clause
* Habendum clause
* Subject to clause
Bob and Sandy are eyeing properties adjacent to the river to build a small retirement home with water views. The survey for one property shows one area where residential construction is prohibited? What might this area be?
* Floodway
A floodway is the area of a floodplain where water flows during a flood. Residential construction is prohibited in a floodway.
- Coastal zone
- Flood plain
* Floodway - Riverway
When is the seller paid the full amount of the purchase price for the property?
* At the closing
The seller is paid the property’s full purchase price at the closing
- After acceptance of the down payment or earnest money offer
* At the closing - The day after transferring title to the buyer
- The day prior to the closing
A ______ is a method of conveying real property from one party to another.
* Deed
A deed is a method of conveying real property from one party to another. A deed should be recorded to protect the parties’ interests.
* Deed
* Power of attorney
* Promissory note
* Recordation
Katherine purchased a property for $255,000, borrowing $242,250. The assessed value of the property is $249,700. The property appraisal came in at $257,000. Which of these amounts is used in calculating the transfer tax?
* $255,000
Transfer tax is calculated based on the purchase/sale price ($255,000)
- $242,500
- $249,700
* $255,000 - $257,000
You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who’s your client?
* Buyer
You represent the buyer, which makes the buyer your client. Compensation doesn’t determine agency.
* Buyer
* Seller
* Seller’s agent
* Seller’s sub-agent
Marsten is the personal representative for his grandmother’s estate. After her death, he learns that he can’t distribute the estate’s property until after the will goes through probate. What does this mean?
* The court must determine the will’s validity and supervise distribution of the estate.
The executor carries out the provisions of the will and sees to property distribution after the will has been through probate
- Marsten must apply through the courts to manage his grandmother’s estate.
* The court must determine the will’s validity and supervise distribution of the estate. - The courts must contact all potential heirs to learn of their wishes regarding distribution of the estate.
- The courts must review Marsten’s ability and knowledge related to distribution of the estate.
In a real estate transaction, which of the following is established when the parties enter into an agreement voluntarily with a full understanding of the contract terms?
* Consent
Consent occurs only when the parties enter into the agreement voluntarily with full understanding of the contract terms.
* Consent
* Consideration
* Legal competency
* Legal purpose
Which one of the following statements about asbestos is true?
* No amount of it is considered safe.
Asbestos is harmful mostly when it is disturbed because the fibers are released into the air. No amount of it is safe, and it should only be removed by qualified professionals
- Homeowners can safely remove it.
- It’s harmful only if left in place.
- It’s not harmful at low levels.
* No amount of it is considered safe.
Property owner Susan and property manager Phil just entered into a property management agreement. Which of the following is NOT something that would be addressed in the agreement?
* Phil’s power to sell the property without consulting Susan
Phil has the ability to make day-to-day decisions regarding the property, but he can’t sell or refinance it without getting Susan involved.
- Fees the property manager will charge tenants
- Fees to be paid by the owner
* Phil’s power to sell the property without consulting Susan - The extent of the manager’s authority to act for the owner
Brent and Kathy recently bought a property in a gated community. While doing some landscaping they noticed that their neighbor’s shed seems to be over the lot line and on their property. What should they consult to determine if the shed is an encroachment?
* Survey
The survey will show exact property lines, and Brent and Kathy will be able to use that to determine if the shed is encroaching on their lot.
- Deed
- HOA covenant
- Mortgage
- Survey*
What type of property manager negotiates favorable leases with businesses that include stepped-up increases in leasing rates for long-term tenants?
* An office
Office property managers need to make sure they build in stepped-up increases in leasing rates.
* An office
* A planned unit development
* A real estate development
* A residential
Randa is trying to lower the vacancy rates for the commercial property she manages because her revenue targets will increase by 8% over the next year. What type of budget contains this revenue detail?
** Operating Budget**
The operating budget is an annual budget that includes income and expenses for a property’s operation
Capital reserve
** Operating budget**
Stabilized
Variable
Which one of the following actions would result in the legal termination of an agency agreement?
* The term specified in the agency agreement expired.
If the specified term in the agency agreement expires, the agency agreement would be terminated
- The client wants the seller to make improvements to the property.
- The client wants to attach an addendum to the sales contract.
- There’s an unexpected death in the agent’s family.
* The term specified in the agency agreement expired.
Which zoning classification would be used solely for the development of a home?
* Residential
Residential zoning is used for residences, particularly for single-family homes.
- Industrial
- Mixed use
- Planned use
* Residential
Using the straight-line depreciation method, calculate the total depreciation that would be taken on a commercial building valued a $619,000, not including the value of the land, over a two-year period.
* $31,743.58
Straight-line depreciation for a commercial building means that you should divide the building’s basis ($619,000) by 39 years. The yearly depreciation is $15,871.79, and you’d multiply this by two to get the two-year depreciation total. Remember that land doesn’t depreciate
- $15,871.79
* $31,743.58 - $7,935.90
- Can’t be determined with the information given.
In the movies, a shady salesperson might say “I have some great farmland to sell you in the Midwest; just take a look at this brochure and let me know if you’d like to buy!” The federal government passed a law to prevent such fraudulent sales of property sight unseen. What is that law?
* Interstate Land Sales Full Disclosure Act
The Interstate Land Sales Full Disclosure Act prevents fraud by requiring specific disclosures from developers.
- Interstate Citizens Protection Act
* Interstate Land Sales Full Disclosure Act - Police Power Act
- Subdivision Act of 1997
Which department typically decides which development projects require a permit or approval?
* Building Department
This is the building department’s domain
* Building department
* Environmental compliance department
* Health department
* Housing department
The MARIA acronym helps to identify the five tests of a fixture. Which of the following tests refers to how and whether the item is attached to the property?
* Method of annexation
Method of annexation refers to how and whether the item is attached to the property. This is the M in MARIA
- Adaptability of the item to the land’s use
- Agreement of the parties
- Intention in placing item on land
* Method of annexation
Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating?
* Seisin
The covenant of seisin guarantees that the grantor owns the property that appears in the deed. Because the sale of property to Ari’s neighbor was never recorded, his deed still shows that he owns the entire parcel
- Against encumbrances
- Quiet enjoyment
* Seisin - Warranty
Alex, a high school freshman, started a neighborhood lawn care business. Simone decides to hire Alex to mow her lawn every two weeks. Alex presents Simone with a written contract outlining the services to be provided and the fee Simone will pay. Which of the following is true in this situation?
* If both parties are content to uphold their agreement, the fact that it’s not legally binding doesn’t matter.
Because a minor can’t enter into a contract, this contract is technically invalid, voidable, and unenforceable. However, if the neighbor and the student are content to uphold their agreement, the fact that it’s not legally binding doesn’t matter
- Because minors can’t enter into a contract, this contract is void.
- Because this contract binds Alex and Simone to an obligation that’s legal for a minor to perform (mowing lawns), the contract is valid and enforceable for both parties.
* If both parties are content to uphold their agreement, the fact that it’s not legally binding doesn’t matter. - Minors can’t enter into contracts, so Alex’s parents are legally obligated to uphold the contractual obligations if Alex fails to fulfill them.
Janson Industries worked with architects and engineers to draw up plans for a planned community that will include residential, shopping, dining, and entertainment uses within the community itself. As a property that falls under mixed-use zoning, what does the company have to provide to the planning commission?
* Plat map
PUD developers have to file detailed plat maps with their planning boards, and the maps should show all of the desired uses for the development.
- By-laws
- Covenant
- Easements
* Plat map
In 2010, what agency banned Freon® as a refrigerant?
* The EPA
On January 1, 2010, the EPA, under Title VI of the Clean Air Act, mandated that refrigerant R-22 (commonly known as Freon®) be replaced by 410A (commonly known under the brand name Puron®)
- The attorney general
- The DEC
- The DEP
* The EPA
The amount and disposition of security deposits for commercial tenancy are defined by ______.
* The lease
If a provision isn’t in the lease, such as a charge for late payment, it can’t be enforced
- A verbal agreement between the owner and the tenant
- State law
* The lease - The tenant’s type of business
Robert and Sarah enter into a contract for Sarah to purchase Robert’s home. Robert decides he doesn’t want to sell, and is elated when he finds out that Sarah’s only 17 years old. Can Sarah force Robert to sell?
* Yes, Sarah can require that Robert fulfill the contract terms.
In the same way that a legally incompetent party can void a contract while the competent party cannot, a legally incompetent party can enforce a contract should the competent party wish to terminate.
- No, because Sarah can’t legally enter into a contract.
- No, she can purchase the house if Robert doesn’t object, but can’t do so if he objects.
- Yes, as long as she gets a legally competent party to co-sign the contract with her.
* Yes, Sarah can require that Robert fulfill the contract terms.
Renee listed her property for three months starting on March 13. By August, the property hasn’t sold. This is after lots of marketing and effort from the agent, a price adjustment, and several showings. Renee decided to list the property with another firm. Under which of these conditions can Renee list the property with another firm without breaching her agreement?
* The listing agreement expired.
If the agreement has expired and Renee has chosen not to extend it, she may list the property with another brokerage firm.
- She can terminate with no penalty as long as she lists with another firm.
- The agent abandoned the listing.
- The agent didn’t put forth enough effort, so Renee can terminate the agreement.
* The listing agreement expired.
Jamie owns a lakeside home. Over a period of years, the water has receded quite a bit, doubling the size of the sand beach on his property. What’s the name of this process?
** Reliction**
Reliction is the gradual receding of water, which uncovers new land
Accretion
Erosion
Exclusion
** Reliction**
Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan’s agreement?
* The agreement terminates by force of law.
Because the property was destroyed, the listing agreement terminated by force of law
- It’s terminated once the specified term in the agency agreement expires.
- Jenson and Susan can mutually agree to terminate the agreement.
* The agreement terminates by force of law. - The client can revoke the agreement but may be considered in breach of contract.
Who are the two parties to a property management agreement?
* Property manager and owner
The property management agreement cements the relationship between the property manager and the owner.
- Landlord and tenant
- Owner and tenant
* Property manager and owner - Tenant and property manager
Lisa is holding an open house for her client, Tim. Several couples stop by. Aarthi and Ram don’t interact with Lisa at all. Gina and Reggie talk with Lisa about the property; they’re not working with
another licensee. Marcus and Marvin stop by and talk with Lisa about the property; they’re already working with another licensee. Which parties are considered consumers at this point?
* Aarthi and Ram
Tim is Lisa’s client; Gina and Reggie and Marcus and Marvin both talk with Lisa about the property, so they could be considered customers. Aarthi and Ram made no contact with Lisa, so are most likely to be termed consumers at this point
* Aarthi and Ram
* Gina and Reggie
* Marcus and Marvin
* Tim
Which one of the following is true about ownership or title to a property?
* Constructive notice to the public of real property ownership occurs when the deed is recorded.
Recording and possession give the public constructive notice that ownership has changed hands. It also protects the buyer from others’ claims on the property.
* Constructive notice to the public of real property ownership occurs when the deed is recorded.
* The last party to record has priority.
* The seller is responsible for paying for owner’s and lender’s title insurance.
* Title isn’t finalized until the deed has been recorded.
What happens after a foreclosure if there isn’t enough money from the sale to pay off all of the lien holders against a property?
* The former owner may owe a debt to lien holders who aren’t fully paid.
The former owner may owe a debt to lien holders who aren’t fully paid from the foreclosure. Once the foreclosure is completed, the property is no longer security for any liens that weren’t paid through the sale.
- All claims are void if there isn’t enough money after the foreclosure sale of the property.
* The former owner may owe a debt to lien holders who aren’t fully paid. - The former owner’s wages will be garnished for the remainder of what’s owed.
- The lien holders must refile on the former owner’s next property.
After a few meetings, the Stinsons sign a listing agreement with broker Vera so she can sell their house. The house has already generated interest from a potential buyer named Sergei, who has spoken with Vera about the house’s price and square footage. Which of the following is true about this situation?
*** The Stinsons and Vera have brokerage relationship agreement. **
The Stinsons and Vera now have an express brokerage relationship agreement since they signed a listing agreement. Vera has only provided basic information to Sergei, so her actions have not crossed the line into agency-level assistance.
- Because Vera now has a sub-agency relationship with the Stinsons, she shouldn’t talk to Sergei until the house is officially on the market.
*** The Stinsons and Vera have brokerage relationship agreement. ** - Vera has an agency agreement with Sergei.
- Vera should disclose the dual agency that has been created by her direct assistance to the buyer.
In the rectangular survey system, what is a base line?
* An east-west line used as a reference point
Base lines run east-west, and principal meridians run north-south. Both are used in the rectangular survey system.
* An east-west line used as a reference point
* A north-south line used as a reference point
* The center-most section identified
* The center-most township identified
In what type of property transfer is personal property given to the government for the public’s use?
* Dedication by deed
A dedication by deed occurs when land is given to the government without consideration and for the public’s use.
- Compensatory deed
* Dedication by deed - Deed gift
- Government deed
What type of property manager works with architects and contractors to get the thing built and may or may not handle the leasing of the building to tenants?
* A real estate development
Real estate development property managers work with architects and contractors to get the property built. They may or may not also handle the leasing of the building to tenants
- An office
* A real estate development - A residential
- A retail
What part of an agreement are the promises that each party makes?
* Consideration
Consideration is the giving of something of value in exchange for something of value
* Consideration
* Flaw
* Legal competency
* Undue influence
Which of the following would be considered personal property?
* Free-standing TV
If the item is permanently attached to the real property, it becomes real property. Personal property, also known as chattel, is attached temporarily.
- Built-in microwave
- Custom curtains
* Free-standing TV - In-ground pool
A home buyer has decided to invest their small inheritance in real estate. They are drawn to the fact that they can add a building where there wasn’t one previously and immediately increase the value of the investment. Which economic characteristic of real property is this?
* Improvements
The economic characteristic of improvements says that a land’s value can be influenced by changes that are made to it.
- Area preference
* Improvements - Permanence
- Scarcity
What special concern do foreclosed properties often present?
* There could be hidden title issues.
While a foreclosed property may very well be a fixer-upper, typically you should be more concerned with any hidden title issues it may have.
- Buying the property at a discount may have tax implications.
- The homeowners may or may not have property insurance.
- The property sale may be subject to additional fees that will be passed to the new buyer.
* There could be hidden title issues.
Why does the closing agent review the purchase contract?
* To gather closing-related information agreed to in the contract
The closing agent uses the purchase contract to be sure that the closing process and prorations follow the parties’ wishes as agreed to in the contract.
- To check for contract errors
- To ensure that all contract signatures are in place
- To ensure that both parties are protected by clauses in the contract
* To gather closing-related information agreed to in the contract
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?
* SARA
SARA, or the Superfund Amendments and Reauthorization Act, created an innocent landowner defense. Often, the courts will review a SARA case and determine liability.
- CERCLA
- EIS
* SARA - Wetlands Conservation Act
Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn’t, what problem might this create?
* Basement leaks
Soil sloping toward a home means that rain runs off toward the home. This improper drainage can lead to leaks and moisture issues.
* Basement leaks
* Chimney issues
* Contamination of the home’s water source
* Mosquito breeding
Which of these statements about the homeowner’s right of redemption is true?
* Rights of redemption window with REOs may have expired.
Because of the length of time it takes to process a property after the foreclosure sale, the homeowner’s redemption period may have expired before the lender puts the REO on the market.
- Homeowner right of redemption applies to foreclosures, short sales, and REOs.
- Only foreclosures are subject to homeowner’s redemption rights.
- Right of redemption timelines are longer for foreclosures than they are for short sales.
* Rights of redemption window with REOs may have expired.
A buyer has a 15-year, $250,000 loan with a 5.5% interest rate. How much of the first monthly payment is interest?
* $1,145.83
($250,000 x 0.055) ÷ 12 = $1,145.83
* $1,145.83
* $13,750.28
* $1,388.89
* $916.67
Your buyer Clint loves older homes and wants to make an offer on a beautiful Craftsman. He doesn’t like the yellow brick and has plans to paint it a lovely Williamsburg blue. You tell him that he may not be able to change the color or, even if he can, he may have to get the color approved first. What did you see on the property disclosure form that hinted at this?
* The house is in a historic preservation district.
Most seller disclosures include whether or not the house is in an identified historic preservation district. If it is, district guidelines may govern the external aesthetic choices.
- The house borders a wetlands.
- The house has a tax abatement.
* The house is in a historic preservation district. - The house was built prior to 1978.
Which form of real property ownership (for owners other than married couples) means there’s equal ownership shares with undivided possession rights?
* Joint tenancy
Joint tenancy provides equal ownership shares with undivided possession rights and requires four ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.
* Joint tenancy
* Tenancy by the entirety
* Tenancy in common
* Tenancy in severalty
Rhonda purchased an existing pet store in her neighborhood, and she’s so excited! Her animal-loving aunt is thrilled for Rhonda but disappointed that she won’t be able to visit the store in her wheelchair, as the aisles are narrow and there isn’t enough room to move around. What is true about Rhonda’s responsibilities to her aunt and other people with disabilities?
** Since Rhonda purchased an existing building and business, the ADA requirements aren’t as strict as with new construction and vary by building.**
There is no required minimum for existing buildings; instead, each business must make a reasonable effort to resolve usage barriers for people with disabilities
- At a minimum, Rhonda is required to add an accessible bathroom.
- At a minimum, Rhonda is required to add an accessible entrance to the building.
- Because Rhonda purchased a retail business, she must meet the same ADA requirements as new construction buildings.
** Since Rhonda purchased an existing building and business, the ADA requirements aren’t as strict as with new construction and vary by building.**
What are improvements with regard to property?
* Artificial attachments to land that include items such as fencing, buildings, and walkways
Improvements are artificial attachments to land that include items such as fencing, buildings, and walkways.
- Another name for a building permit
* Artificial attachments to land that include items such as fencing, buildings, and walkways - Natural fixtures that are part of the land and that enhance its value
- The right to increase the value of a property
In which of these situations has the licensee compromised the duties of loyalty and disclosure?
* Nate didn’t tell his client about a conflict of interest related to the sale of his client’s property.
Nate should have disclosed his conflict of interest. He compromises his duty of loyalty to his client by not doing so. Licensees must disclose all material facts to customers and other parties, and all offers must be presented to a seller client. Josie doesn’t need to disclose to Rob that he’s representing the seller since Rob IS the seller.
- Diana, the seller’s agent, presented an offer to the seller even though it was under list price.
- Hillary, in working with the seller, told the buyer about a material defect the seller hadn’t disclosed.
- Josie, in listing Rob’s property, failed to disclose to Rob that he represents the seller.
* Nate didn’t tell his client about a conflict of interest related to the sale of his client’s property.
Lowell used to own 17 acres of property on the bay. After last year’s hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell’s loss of acreage?
* Avulsion
Avulsion is the loss of land by a sudden, large-scale change in water flow. A hurricane would create a sudden large change in water flow.
- Accretion
* Avulsion - Erasure
- Reliction
On which type of property would the cost approach typically be used when determining value?
* New construction
The cost approach is often used for new construction, unique properties, and special-purpose commercial uses.
- Condominium
- Cooperative
* New construction - Older but not historical property
Which legal description method uses compass headings and directions?
* Metes and bounds
Metes and bounds uses compass headings and directions. The rectangular system divides land into townships and further divides those into sections.
- Block and grid
- Lot and block
* Metes and bounds - Rectangular government survey
A property manager is preparing a monthly report pursuant to the terms of a property management agreement. This report details actual income received from rent and other fees, along with actual expenses paid. What report is she preparing?
* Cash flow report
The cash flow report is usually created monthly and shows the current financial status of a property. It accounts for income received (such as rent, late fees, etc.) and expenses (such as utilities, personnel, repairs, etc.) paid.
- Budget comparison statement
* Cash flow report - Operating budget
- Profit and loss statement
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400 feet deep. What was the price per front foot of the property?
* $1,335.67
First, find the square footage (5.5 × 43,560 = 239,580). You’re given one dimension of the rectangle, so find the other: 239,580 ÷ 400 = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95 = $1,335.67 per front foot.
* $1,335.67
* $2,000
* $363.64
* $598.95
First, find the square footage (5.5 × 43,560 = 239,580). You’re given one dimension of the rectangle, so find the other: 239,580 ÷ 400 = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95 = $1,335.67 per front foot.
Your clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. If the amortization factor is 5.36822, how much would their principal and interest payment be per month? Remember: The monthly payment multiplier is per $1,000 of the mortgage.
* $1,073.64
The estimated payment is $1,073.64. Remember to divide $200,000 by 1,000, then multiply the factor (5.36822) by 200.
- $1,001.32
* $1,073.64 - $1,296.21
- $1.347.91
The estimated payment is $1,073.64. Remember to divide $200,000 by 1,000, then multiply the factor (5.36822) by 200.
Why is it important for a buyer to know if any easements or encroachments exist on a property?
* Both easements and encroachments affect the property’s lot size, enjoyment, and use, which can affect a property’s value.
A property’s enjoyment and use can be impacted by easements or encroachments.
* Both easements and encroachments affect the property’s lot size, enjoyment, and use, which can affect a property’s value.
* Both easements and encroachments are illegal. The buyer could end up in court.
* It helps determine special assessment levies.
* The buyer will have to remove these before the property can be re-sold.
A property’s enjoyment and use can be impacted by easements or encroachments.
Jason’s having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state’s usury law. Which of these statements must be true?
* His state’s personal loan interest rate cap is less than 20%.
Usury prohibits excessive interest charges on personal and consumer loans. Many states have a cap on the percentage that can be charged. Jason’s deal with his landlord would be in violation if the interest rate is higher than the cap.
- Consumers are not supposed to be charged interest on a personal loan.
* His state’s personal loan interest rate cap is less than 20%. - His state’s personal loan interest rate cap is more than 20%.
- Landlords loaning tenants money is a violation of usury law.
What’s the meaning of “good faith” in relation to contract law?
* The parties agree that they’ll execute the contract to the best of their ability and without any fraud or misrepresentation.
Acting in good faith means that the parties will carry out the contract terms honestly, fairly, and to the best of their ability
- The contract terms are written to be equally beneficial to each party.
- The contract was formed without undue influence or duress.
* The parties agree that they’ll execute the contract to the best of their ability and without any fraud or misrepresentation. - The parties agree to arbitration or mediation instead of legal action as a means of settling any disputes.
Prior to a certain act’s existence, there was no legal protection for women who endured sexual
harassment from landlords and sellers when they attempted to obtain housing. What’s this act called?
* Housing and Community Development Act of 1974
The Housing and Community Development Act of 1974 included gender or a person’s sex in the list of protected classes.
- Civil Rights Act of 1866
- Fair Housing Amendments Act of 1988
- Federal Fair Housing Act of 1968
* Housing and Community Development Act of 1974
The Housing and Community Development Act of 1974 included gender or a person’s sex in the list of
protected classes.
How many parties does a deed of trust involve?
Three: borrower, lender, and trustee
A deed of trust involves three parties: the borrower, the lender, and the trustee.
- Five: borrower, lender, trustee, trustor, and beneficiary
- Four: borrower, lender, trustee, and trustor
- Three: borrower, lender, and trustee
- Two: borrower and lender
Which one of the following could be a clue that a property was formerly a waste disposal site?
* Soft spots, mounds, and discolored soil
Clues to locating a waste disposal site include soft spots, mounds, and discolored soil. Site research and soil tests can provide a definite answer
- Birds constantly on the property
- Plate covering an oil fill area
- Scorch marks on trees surrounding the area
* Soft spots, mounds, and discolored soil
Clues to locating a waste disposal site include soft spots, mounds, and discolored soil. Site research
and soil tests can provide a definite answer
Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down
payment, and the buyer’s appraisal came in at $300,000. On what number will the buyer’s lender base the loan-to-value ratio?
$300,000
Lenders use the lesser of the sales price or appraised value.
$249,000
$299,000
$300,000
There’s no way to tell given the data provided.
Lenders use the lesser of the sales price or appraised value.
A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall?
* 7.9%
The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R).
So $67,500 ÷ $850,000 = 79 or 7.9%.
This formula can work in reverse as well: value (purchase price) × cap rate = net
operating income (V × R = I).
The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R). So $67,500 ÷ $850,000 = . 079 or 7.9%. This formula can work in reverse as well: value (purchase price) × cap rate = net
operating income (V × R = I).
- 12.59%
* 7.9% - 8.67%
- 9.2%
The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R).
So $67,500 ÷ $850,000 = 079 or 7.9%.
his formula can work in reverse as well: value (purchase price) × cap rate = net
operating income (V × R = I).
If there is some kind of defect on a property’s title, what effect does this level of transferability have on
the property’s value?
* The value falls.
If a property can’t be easily transferred, its value falls.
* The value falls.
* The value remains unchanged.
* The value rises.
* Transferability has no effect on value.
If a property can’t be easily transferred, its value falls.
Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What’s their
monthly interest amount?
* $562.50
Grant and Adela’s annual interest amount is $6,750 ($150,000 x 0.045). To get the monthly amount, divide $6,750 by 12. Their monthly interest amount is $562.50.
- $550.25
* $562.50 - $570
- $575.75
Grant and Adela’s annual interest amount is $6,750 ($150,000 x 0.045). To get the monthly amount,
divide $6,750 by 12. Their monthly interest amount is $562.50.
The legal description of the project, easements that run with the land, and street and traffic patterns
are all under consideration when a local planning board ______.
- Reviews a developer’s project plat
These factors are under consideration when a local planning board reviews a developer’s project plat.
- Calculates the developer’s project application fee
- Considers granting a special use permit to a developer
- Reviews a developer’s project plat
- Reviews the zoning for a developer’s project
These factors are under consideration when a local planning board reviews a developer’s project plat.
A seller decides to terminate her listing agreement and rent the property out instead of selling it after
it’s been on the market for several months with no offers. Assuming that her listing agent has fulfilled
all of his responsibilities under the contract, can the seller terminate the contract before its expiration
date?
* Only if the seller and the listing agent mutually agree to terminate the agreement.
Since the listing agent hasn’t done anything to breach the contract, the seller’s only options are to let the listing agreement expire or try to reach mutual agreement with the listing agent to terminate the agreement without penalty.
* Only if the seller and the listing agent mutually agree to terminate the agreement.
* Only if the seller succeeds in converting it to a rental.
* Yes, because the seller has not received any offers on the listing.
* Yes, because the seller is entitled to terminate the agreement at any time.
Governments like property taxes as a revenue source because ______.
*** Property values, and therefore taxes, tend to remain stable
**
Property taxes have specific characteristics that make them a reliable target for taxation, and one of those characteristics has to do with the value of the property.
- Everyone has to pay property taxes
- Property owners are easy to find
- Property taxes always increase, creating ever greater revenue
*** Property values, and therefore taxes, tend to remain stable
**
Sondrine’s beach cottage has a right of way that allows nearby residents to get to the beach. What is the primary difference between a right of way and an easement?
* A right of way provides a pass-through, but not a right to use the property.
A right of way doesn’t grant the right to use the property in any way, or to construct anything on it. It merely grants an individual or a business the right to pass through the property to get to another property.
- A right of way always has a defined expiration date.
- A right of way is always for an indefinite time period.
- A right of way offers the right to use the property for some function, as compared to just as a pass-through.
* A right of way provides a pass-through, but not a right to use the property.
In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of
the loan.
* Decreases
The interest portion of the payment generally decreases over the life of the mortgage loan as the principal portion increases
* Decreases
* Has no bearing on the total
* Increases
* Remains the same
The interest portion of the payment generally decreases over the life of the mortgage loan as the
principal portion increases
Which of the following scenarios best describes a net listing?
* Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
A net listing commission involves commission of an indeterminate amount and depends on the sales price. Net listings are illegal in several states.
- Carmel is selling her condo for $280,000 and is offering 6% commission to the listing broker.
- Jason is listing his duplex for $400,000 but reserves the right to find his own buyer and not have to pay a listing commission.
* Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount. - Ralph is selling his townhome for $225,000 and is paying a brokerage fee of $25,000.
What does the “T” in PITI stand for?
* Taxes
PITI stands for principal, interest, taxes, and insurance.
- Tariff
* Taxes - Term
- Territory
PITI stands for principal, interest, taxes, and insurance.
Robert is the general contractor for a home being constructed in a new development. The foundation has been poured, and he’s working with the homeowners to make some decisions that weren’t identified in the blueprints he’s working from. Which of the following details are guided by local building
codes?
* Number and type of electrical breakers
Electrical safety standards are typically a component of building codes in almost any location.
- Material used for shingles
* Number and type of electrical breakers - Number and type of windows per square foot.
- Placement of gas range in the kitchen
Which economic principle is at work when a property’s value increases because a neighboring property has increased in value?
- Progression
When the value of a property increases thanks to an adjacent higher-quality property, this is called progression.
- Conditional value
- Price bump
- Progression
- Regression
When the value of a property increases thanks to an adjacent higher-quality property, this is called progression.
A rectangular lot is 450 feet long and 250 feet wide. How do you calculate the square footage?
* Multiply the length by the width.
To calculate the area of a rectangle, multiply the length by the width.
- Add the length to the width and multiply by two.
- Divide the length by the width.
* Multiply the length by the width. - Multiply the length by the width and divide by two.
To calculate the area of a rectangle, multiply the length by the width.
Annabelle’s previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence?
* Listing a property in the main part of the city that she’ll market as a fixer-upper
Listing a fixer-upper doesn’t pose any variations that would cause it to be outside Annabelle’s scope of expertise. Each of the other situations could require Annabelle to seek assistance from her broker or another expert in her firm.
- Listing a multi-million-dollar residence in the city’s exclusive lakeshore estates
* Listing a property in the main part of the city that she’ll market as a fixer-upper - Working with a buyer client to purchase a condo
- Working with an investor who intends to purchase a rental property
You’re explaining to your client that using electronic documents and signatures simplifies the home buying process. Your client is skeptical about these signatures. You describe the Uniform Electronic
Transactions Act (UETA) and tell your client ______.
* The UETA gives electronic signatures the same legal weight as “wet” signatures
The UETA is an attempt to standardize acceptance of electronic documents and signatures, but state laws govern the use of these electronic items. In states that have adopted UETA (or similar laws), an electronic signature is considered equally valid as a wet signature
* The UETA gives electronic signatures the same legal weight as “wet” signatures
* The UETA provides a guarantee that electronic signatures will hold up in court
* The UETA requires states to permit electronic signatures on all real estate-related documents
* UETA takes precedence over state laws
What information does the Loan Estimate provide to buyers under required disclosures law?
* Loan payment schedule
Lenders provide the Loan Estimate within three days of receiving a borrower’s application. Borrowers receive final closing cost information (on the Closing Disclosure) three days before closing.
- Broker commission rates
- Final closing costs
* Loan payment schedule - Referral fees
Lenders provide the Loan Estimate within three days of receiving a borrower’s application. Borrowers receive final closing cost information (on the Closing Disclosure) three days before closing.
What phrase, when used in a real estate contract, reminds the parties to avoid unnecessary delays and to adhere to all contract dates?
- Time is of the essence
“Time is of the essence” means that specific timeframes must be adhered to. If one party misses a deadline, that party is in breach of contract
- Haste makes waste
- Patience is a virtue
- Seek the advice of an attorney
-
Time is of the essence
“Time is of the essence” means that specific timeframes must be adhered to. If one party misses a deadline, that party is in breach of contract
While Martha’s paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount
and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?
- A promissory note
A promissory note is the borrower’s promise to repay the loan. When the loan is paid in full, the note is marked as paid in full and returned to the borrower.
- A deed of trust
- A mortgage
- An assignment
-
A promissory note
A promissory note is the borrower’s promise to repay the loan. When the loan is paid in full, the note is
marked as paid in full and returned to the borrower.
Sgt. Johnson is an active member of the Marines. He’s been serving for 10 years. He wants to buy a home with no money down. What loan option seems like the best fit?
VA
While the sergeant could consider any loan, the only loan option with a zero down payment is a VA loan.
Conventional
FHA
FHA, VA, or conventional
VA
While the sergeant could consider any loan, the only loan option with a zero down payment is a VA loan.
The Slathertons are looking at buying a $300,000 property with a 20-year loan at a 6% interest rate. Using the amortization chart factor of 7.16431, how much would their monthly principal and interest
payment amount be?
- ** $2,149.30**
The estimated payment is $2,149.30. Remember to divide $300,000 by 1,000, then multiply the factor (7.16431) by 300.
- ** $2,149.30**
- $2,421.65
- $2,981.92
- $3,1596.30
The estimated payment is $2,149.30. Remember to divide $300,000 by 1,000, then multiply the factor (7.16431) by 300.
A husband and wife both consider themselves to be African American, although the husband has much darker skin and hair than his wife. When the husband went to the Valley Falls apartment manager’s office to request a rental application, he was told there were no vacancies. The wife went in
a day later and received an application. This may be discrimination based on ______.
- Color
- Color
- National origin
- Race
- Sex
It’s possible that Rhonda was discriminated against based on her skin color.
What can buyers do to protect themselves from title issues when purchasing property?
- Purchase title insurance.
Purchasing title insurance can protect buyers from any defects in the title when purchasing property. The seller’s name on the deed could have been forged, so it’s no assurance.
- Ensure the seller’s name is on the deed.
- File a lis pendens claim at the court before buying the property.
- File a security agreement at the county clerk’s office.
- Purchase title insurance.
After closing, the seller refused to deliver the title. The buyer met all of the obligations outlined in the written contract, so the buyer took the seller to court. What is this an example of?
- Suing for specific performance
In this example, the buyer sued for specific performance as a means of remedying the breach of contract.
- Accepting partial performance
- Rescinding the contract unilaterally
- Suing for damages
- Suing for specific performance
Your clients closed on their property yesterday, but you still have some paperwork that you need to deliver to them as soon as possible. Under which fiduciary duty are you acting?
- The duty of accounting
The duty of accounting may continue even after the transaction closes. The agent must account for any documents or money belonging to the client until it is delivered to the appropriate party.
- The duty of accounting
- The duty of confidentiality
- The duty of disclosure
- The duty of obedience
The duty of accounting may continue even after the transaction closes. The agent must account for any documents or money belonging to the client until it is delivered to the appropriate party.
A licensee knows that three-bedroom properties with two bathrooms sell quickest in his market. In an ad for a new listing, he wrote, “Bonus room could easily be a third bedroom”, even though he knows from experience that this isn’t true because the room is too small, has no egress and no heat source, and can only be accessed by walking through a bathroom. Is the licensee guilty of misrepresentation?
*** Yes, because he knew there would be major issues converting that room to a bedroom.
**
Though the licensee didn’t market the property as a three-bedroom home, his experience should tell him that converting the bonus room to a third bedroom would not be easy, as he noted in his ad.
- No, because any buyers interested in the bonus room as a third bedroom should be able to see for themselves that it won’t work.
- No, because the term “easily” is subjective.
- Yes, because he billed the property as a three-bedroom when it only has two.
*** Yes, because he knew there would be major issues converting that room to a bedroom.
**
When a licensee is working with a property located near a Superfund site, what does that mean?
* The licensee must disclose the existence of an environmental hazard in the area.
A property with a known Superfund site in the vicinity requires disclosure, as this is a material fact
- A portion of the sale price must go to the EPA to fund clean-up of the site.
- The licensee is required to disclose potential health threats to anyone in the area when showing the property.
* The licensee must disclose the existence of an environmental hazard in the area. - The property cannot be sold until the site is removed from the NPL.
Because Shelby has a high prepayment penalty on her high-interest loan, she is ________.
*** Unable to refinance her high-interest subprime loan without paying a stiff penalty
**
A prepayment penalty fee also may be applied before borrowers can refinance.
- Able to pay off the loan early without penalty
- Able to refinance whenever she wants without incurring any penalties
- Eligible for additional tax deductions
*** Unable to refinance her high-interest subprime loan without paying a stiff penalty
**
In addition to fines, individuals who violate antitrust laws may face imprisonment for up to what length of time?
* 10 years
Individuals who violate antitrust law may be liable for up to a $1 million fine and up to 10 years of imprisonment.
* 10 years
* 30 days
* One year
* Two years
Individuals who violate antitrust law may be liable for up to a $1 million fine and up to 10 years of imprisonment.
A homeowner has converted two rooms in his home to a rental unit. What does the “Mrs. Murphy” exemption permit him to do?
* Refuse to rent to a female tenant.
The “Mrs. Murphy” exemption applies to owner-occupied buildings with no more than four units. The owner may choose to rent only to a like-sex tenant but may not discriminate on any other basis
- Advertise for a tenant of a specific race.
- Move out of the property and rent both portions of it, relying on the “Mrs. Murphy”
- exemption to permit renting only to single females.
* Refuse to rent to a female tenant. - Use the services of a real estate professional to advertise for a male tenant.
Which of the following statements about the number of contingencies in a sales contract is true?
* The inclusion of numerous contingencies makes it less likely that the buyer’s offer will be accepted.
While contingencies provide important safeguards, buyers should bear in mind that the inclusion of numerous contingencies makes it less likely that their offer will be accepted, especially in a competitive
bidding situation.
- Every sales contract should contain a minimum of three contingencies.
* The inclusion of numerous contingencies makes it less likely that the buyer’s offer will be accepted. - The more contingencies, the better from the seller’s perspective.
- The number of contingencies is directly related to the cost of the home. The higher
- the asking price, the greater number of contingencies.
The Graysons just closed on their new home. They move in tomorrow. What type of contract do the Graysons have?
- ** Executed**
This is an example of an executed contract because the parties met all terms of the contract and successfully closed the sales transaction.
- ** Executed**
- Executory
- Option
- Unilateral
This is an example of an executed contract because the parties met all terms of the contract and successfully closed the sales transaction.
To which of the following are most of the buyer’s closing costs typically related?
* The mortgage loan the buyer’s obtaining
A large part of the buyer’s closing costs will be associated with the new mortgage loan, including origination fees and points, the appraisal, and the credit report.
- Hiring a broker to find a buyer for the property
- Negotiated repairs on the property
- Providing clear title to the property
* The mortgage loan the buyer’s obtaining
Seller Jason is giving listing agent Rebecca a tour of his house and pointing out all the features, even the spot in the attic where a previous owner’s ghost likes to come back and visit. Jason asks Rebecca if buyers should be told about this. Which response is best?
“The presence of spirits stigmatizes the property. Many states don’t consider this a material fact requiring disclosure, but this is my first ghost encounter, so I’ll check our laws.”
Some states require disclosures related to stigmatized properties, so make sure you know whether your state requires such disclosures.
“All states require sellers to disclose any undesirable feature of a house, which
includes ghosts.”
“The presence of spirits stigmatizes the property. Many states don’t consider this a material fact requiring disclosure, but this is my first ghost encounter, so I’ll check our laws.”
“We can tell prospective buyers that the property comes with a roommate.”
“You can’t mention this, because it would be a fair housing violation.”
Who are the parties to a property management agreement?
The licensee acting as property manager and the property owner are the parties to a property management agreement that establishes a general agency relationship.
* The property manager and property owner
* The property manager and the tenant
* The property manager, property owner, and tenant
* The property owner and the tenant
The primary purpose of the Real Estate Settlement Procedures Act is to ensure that buyers ______.
* Know all settlement costs up front
RESPA, at its core, ensures that buyers know their settlement costs so that nothing is a surprise at closing.
- Can get federally guaranteed loans
- Get favorable interest rates
- Have mortgage options to choose from
* Know all settlement costs up front
Which agency prohibits unfair acts, practices, or methods of competition, and enforces federal antitrust and consumer protection laws nationally?
- Federal Trade Commission
Several agencies are involved in antitrust law and enforcement. The FTC has the authority to determine if practices are unfair and to enforce compliance with the Sherman and Clayton acts.
- Attorney general’s office
- Consumer Reports
- Federal Trade Commission
- National Bar Association
Several agencies are involved in antitrust law and enforcement. The FTC has the authority to determine if practices are unfair and to enforce compliance with the Sherman and Clayton acts.
What is true when state and federal laws differ?
- The state law may not remove rights granted to citizens under the federal law.
Fair housing laws are designed to protect citizens from discrimination. States can’t make laws that remove rights that federal law grants to citizens.
- State and local law override federal law.
- State lawmakers decide which law prevails.
- The conflicting law is invalidated, effectively removing the law’s requirements.
- The state law may not remove rights granted to citizens under the federal law.
Tres owns a warehouse in an area that is zoned light industrial. With an increased demand for housing in the area, Tres wants to create loft-style condos and have his property designated as residential, even though the surrounding buildings will remain light industrial. What type of zoning is this?
- ** Spot zoning**
Spot zoning allows a specific property to be rezoned within an existing zoning area. Spot zoning is illegal in some states.
- Aesthetic zoning
- Downzoning
- Incentive zoning
- ** Spot zoning**
Spot zoning allows a specific property to be rezoned within an existing zoning area. Spot zoning is illegal in some states.
Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here?
- ** Plottage**
Plottage is an increase in property value when two neighboring parcels of land are joined together.
- Anticipation
- Contribution
- ** Plottage**
- Progression
Plottage is an increase in property value when two neighboring parcels of land are joined together.
Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn’t take possession of or title to the property. What likely happened?
* The previous owners redeemed the property by paying all mortgage payments and fees.
Some states have a statutory redemption period after a foreclosure sale within which the homeowners
can pay all funds owed to the lender to retain ownership
- The lender received another offer higher than the one Farquhar made at the auction.
- The lender revised the previous owners’ loan and permitted them to remain in the property.
- The other lien holders protested the auction sale, so the lender retained the property.
* The previous owners redeemed the property by paying all mortgage payments and fees.
Which approach to value measures the cost to produce a property, including land acquisition and construction costs?
* Cost approach
The cost approach to finding appraised value measures value as a cost of production, including acquisition of the land and the construction costs.
* Cost approach
* Income approach
* Indirect approach
* Sales comparison approach
Which element is applied first when using the sales comparison approach to value?
* Financing terms and cash equivalency
When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.
- Conditions of sale
* Financing terms and cash equivalency - Market conditions
- Physical characteristics
When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.
What type of arrangement allows the buyer to retain title to the property, but places a security interest in the property on behalf of the seller?
- Purchase money mortgage
Purchase money mortgages allow the buyer to retain title to the property, but the seller has security interest in the property.
- A straight-term loan
- Land contract
- Purchase money mortgage
- Wrap-around mortgage
Purchase money mortgages allow the buyer to retain title to the property, but the seller has security interest in the property.
When purchasing a short sale or foreclosure, what’s one of the biggest frustrations buyers face?
* The length of time it takes to purchase a distressed property.
The purchase of a distressed property can take at least twice as long as the purchase of a traditional property.
- Insurance companies’ refusal to insure homes sold as distressed properties
- Restrictions on the amount a lender will finance on a distressed property
- The difficulty of finding a real estate professional to help them with the purchase.
* The length of time it takes to purchase a distressed property.
The Shores are in the process of buying a beautiful 3,000-square-foot home from the Bishops. They’ve completed all the required paperwork on their loan application. Mary’s analyzing the package to determine their ability to repay the loan. She examines the property’s value, the property type, and the
loan-to-value ratio, among other things. Her recommendation is that the Shores’ loan application be approved. What is Mary’s role?
* The underwriter
Underwriters analyze loan applications and determine whether to approve or deny the loan.
- Member of the loan committee
- The seller
- The seller’s real estate agent
* The underwriter
Underwriters analyze loan applications and determine whether to approve or deny the loan.
A licensee is found guilty of price fixing. What did the licensee do?
* Agreed with a competitor to charge a specific amount.
Agreement between competitors is required for price fixing to occur.
* Agreed with a competitor to charge a specific amount.
* Charged a fixed commission price her broker asked her to use.
* Charged a separate co-op fee for different brokerages.
* Deviated from the standard commission rate.
If a buyer agrees to pay earnest money and have the property inspected within a certain time period and does so before the time period expires, what action has happened for this part of the contract?
- Performance
When all the terms of the contract have been met, there’s been performance of the contract.
- Partial performance
- Performance
- Purposeful voiding
- Termination
When all the terms of the contract have been met, there’s been performance of the contract.
Which of the following properties requires a lead disclosure?
- Duplex built in 1959
A lead disclosure is required for residential properties built before 1978 because paint manufacturers used lead-based paint before it was banned that year.
- Commercial building built in 1960
- Duplex built in 1959
- Duplex built in 1979
- Single-family home built in 1999
A lead disclosure is required for residential properties built before 1978 because paint manufacturers used lead-based paint before it was banned that year.
A homeowner has $80,000 of principal left to pay on the mortgage. The home was recently appraised at $156,000, which is $13,000 more than the purchase price. How much equity does the homeowner have?
- $76,000
To find how much equity she has, subtract the amount she still owes on her mortgage from the appraised value.
- 100%
- $13,000
- $76,000
- $80,000
To find how much equity she has, subtract the amount she still owes on her mortgage from the appraised value.
Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair?
- Inspection contingency
Glynnis had an inspection contingency in her offer, and when the inspector found issues with the electrical system, she negotiated that the owner would fix them. It’s the licensee’s responsibility to ensure all contingencies have been cleared.
- Appraisal contingency
- Financing contingency
- Home sale contingency
-
Inspection contingency
Glynnis had an inspection contingency in her offer, and when the inspector found issues with the electrical system, she negotiated that the owner would fix them. It’s the licensee’s responsibility to ensure all contingencies have been cleared.
When does an agent’s fiduciary duty of loyalty to the client begin?
* The moment both parties agree to an agency relationship
Because agency includes the duty of loyalty, this duty begins the moment both parties agree to an agency relationship.
- Five days after both parties have signed the agency agreement
* The moment both parties agree to an agency relationship - The moment the client enters into a sales transaction with another party
- The moment the seller accepts the buyer’s purchase offer
Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of
his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay.
- $390.91
Calculate the loan amount first: $424,900 x .80 = $339,920. Then calculate the tax: $339,920 x 0.00115 = $390.91.
- $390.91
- $439.77
- $488.64
- $97.73
Calculate the loan amount first: $424,900 x .80 = $339,920. Then calculate the tax: $339,920 x 0.00115 = $390.91.
Which of the following is an example of illegal market allocation?
* Two brokerages agree to divide the city in half, each working its own half.
Only an agreement between competing firms to segment the market would be illegal market allocation.
- One brokerage maps out a plan to dominate the eastern part of the city.
* Two brokerages agree to divide the city in half, each working its own half. - Two brokerages each discuss with their licensees where the most lucrative deals can be found.
- Two brokerages each try to win the million-dollar listings.
When a seller received the purchase offer for his bungalow, he was surprised to see a page added to the contract requesting that an attorney review the contract. What is teh seller looking at?
* Addendum
An addendum is a separate form that becomes part of the sales contract.
* Addendum
* Amendment
* Annotation
* Appendix
An addendum is a separate form that becomes part of the sales contract.
What’s another name for an escrow account?
* Trust account
Escrow funds are also called trust funds, just like escrow agents can also be called trustees. Escrow /trust funds are kept in a trust account.
- Closing fund
- Locked account
- Savings account
* Trust account
Escrow funds are also called trust funds, just like escrow agents can also be called trustees. Escrow /trust funds are kept in a trust account.
How are fines assessed for violations of the CAN-SPAM Act?
* Per violation, which can be a single email
Solicitors may be charged more than $40,000 for every email they send that violates the CAN-SPAM Act.
- Daily
- Monthly
- Per complaint
* Per violation, which can be a single email
Solicitors may be charged more than $40,000 for every email they send that violates the CAN-SPAM Act.
A real estate licensee is assisting a buyer who’s making an offer on his client’s listing. If the licensee is too helpful to the buyer, what might occur?
- Implied agency and undisclosed dual agency
One danger in implied agency is the possibility for undisclosed dual agency.
- A potential bonus from the buyer
- Implied agency and undisclosed dual agency
- Implied friendship
- Undisclosed single agency
One danger in implied agency is the possibility for undisclosed dual agency.
While walking around the exterior of a rural home she’s inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard?
* Underground storage tank
A pipe or a vent sticking out of the ground, or a metal cap plate, are clues that there may be an underground storage tank on the property.
- Capped well
- Radon vent system
- Septic system
* Underground storage tank
A pipe or a vent sticking out of the ground, or a metal cap plate, are clues that there may be an underground storage tank on the property.
Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she’s going to pay on her loan?
- $10,170
A point is 1% of the loan amount. Faye’s loan amount is 60% of the sales price, or $339,000 ($565,000 x 0.60). Her lender is charging three points total, or 3% of the loan amount. That comes out to $10,170 ($339,000 x 0.03).
- $10,170
- $16,950
- $4,520
- $6,780
A point is 1% of the loan amount. Faye’s loan amount is 60% of the sales price, or $339,000 ($565,000 x 0.60). Her lender is charging three points total, or 3% of the loan amount. That comes out to $10,170 ($339,000 x 0.03).
A client has asked her agent for a 24-hour notice on showings. The agent knows this will have a negative impact on the number of showings. Which duty is in conflict with reasonable skill and care?
* Obedience
Carrying out a client’s instructions is the duty of obedience. You shouldn’t blindly follow these instructions, however. If the duty may have a negative impact on the listing or is unlawful, discuss it with your client.
- Accounting
- Confidentiality
- Disclosure
* Obedience
Carrying out a client’s instructions is the duty of obedience. You shouldn’t blindly follow these instructions, however. If the duty may have a negative impact on the listing or is unlawful, discuss it with your client.
In order for her house to accommodate her inability to hear, Angela has made a request for the house to be equipped with a doorbell that also alerts occupants with a flashing light. Which statement is correct?
* This is likely to be considered a reasonable accommodation, and Angela should be permitted to install it at her own expense.
Fair housing reasonable accommodations require housing providers to permit tenants with disabilities to modify their premises to fit their needs. The tenant does so at her own cost, and may be required to
return the unit in its original condition.
- If Angela installs the doorbell, it is considered a trade fixture. If Angela wants to keep it, she must remove it prior to lease expiration.
* This is likely to be considered a reasonable accommodation, and Angela should be permitted to install it at her own expense. - This is likely to be considered a reasonable accommodation, and the landlord should install it for Angela.
- This is not likely to be considered a reasonable accommodation, and Angela will need the landlord’s written consent in order to have it installed.
Bob and Mary are financing $180,500 for a new home. Their lender will approve an interest rate of 5% if Bob and Mary pay two discount points at closing. How much will this cost them?
- ** $3,610**
A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610.
- $180.50
- $32,000
- ** $3,610**
- $9,025
A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610.
What happens to an initial offer from the buyer after a seller counters?
* It’s no longer in play.
If a seller (or buyer, for that matter) wants to counter an offer, it should be related to a significant term
because it essentially takes the original offer out of play.
- It becomes the back-up offer.
- It’s accepted by the seller until the buyer accepts the counter.
* It’s no longer in play. - Sellers cannot counter a buyer’s initial offer.
What happens if a client terminates a listing agreement before its expiration date?
* The client may owe a commission anyway.
The listing agreement may not be cancelled by only one party. It’s possible the client will owe the agent the commission.
- The agent must send the client a notice of release form.
- The agent must sue.
* The client may owe a commission anyway. - The listing is cancelled.
What is put at risk if a buyer misses a contingency deadline?
* The buyer’s earnest money
A missed contingency deadline removes buyers’ ability to terminate and receive a refund of their earnest money. It may also affect the closing date and date of possession.
- The agent’s license
- The broker’s reputation
* The buyer’s earnest money - The sales price
A missed contingency deadline removes buyers’ ability to terminate and receive a refund of their earnest money. It may also affect the closing date and date of possession.
In which of the following listing agreement terminations is there LEAST likely to be a penalty for terminating the agreement?
* The client and agent mutually agree to terminate the listing.
Mutual agreement to terminate a listing typically doesn’t result in any penalty to either party.
- The agent abandons the listing.
* The client and agent mutually agree to terminate the listing. - The client revokes the listing agreement to sell the property to a family member.
- The seller withdraws the listing, deciding instead to stay in the property.
A licensee has a few casual meetings with a buyer where they discussed the type of home the buyer is interesting in purchasing. Although they have not signed an agreement, the buyer assumes the licensee will continue to search for potential properties. Which of these statements is correct?
* The licensee’s actions may have created an implied agency agreement with the buyer.
The discussion and the buyer’s belief that the licensee will continue to help locate a property may have
created an implied agency relationship.
- Because the licensee doesn’t know if the buyer is working with another agent, she’s just inadvertently created a dual agency situation.
- Because the licensee has performed some agency tasks, the parties have an express
agency agreement.
* The licensee’s actions may have created an implied agency agreement with the buyer. - The parties have no agency agreement, either express or implied, until licensee
begins showing the buyer properties.
Which of these would be a breach of a broker’s fiduciary duty of confidentiality?
* When asked by the buyer’s agent if the seller client was firm on the price, the broker said, “Everything’s negotiable”.
The broker’s response to the buyer agent’s question about pricing could be interpreted as a breach of confidentiality.
- The broker told a potential buyer that the city council was considering rezoning the area around the property to commercial/light industrial.
- The broker told the seller client what the percentage commission split is from the designated broker.
- Under court order, the broker revealed conversations about the financial status of the previous client.
* When asked by the buyer’s agent if the seller client was firm on the price, the broker said, “Everything’s negotiable”.
What’s a power of attorney?
* A legal document that allows a person to act as attorney-in-fact for another in a financial, business, or health matter.
Power of attorney is a legal document that allows a person to act as attorney-in-fact for another in a financial, business, or health matter.
* A legal document that allows a person to act as attorney-in-fact for another in a financial, business, or health matter.
* An individual who decides to waive the right to an attorney
* The legal right bestowed on a lawyer once he graduates
* The right to an attorney in any legal dispute
Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points?
- ** $9,005.85**
The sales price is $285,900, and 90% of that (aka our loan amount) is $257,310. The discount amount is 3-1/2 points, (.035) multiplied by $257,310 = $9,005.85.
- $1,000.65
- $10,006.50
- ** $9,005.85**
- $9,585.00
The sales price is $285,900, and 90% of that (aka our loan amount) is $257,310. The discount amount is 3-1/2 points, (.035) multiplied by $257,310 = $9,005.85.
Which of the following is an example of an agent exercising the duties owed to customers and other parties?
* Francine disclosed information about the flooding basement to the buyer and buyer’s agent.
The duties licensees owe to customers and other parties include disclosure of material facts, honesty, and fairness.
- Ari didn’t present the buyer’s offer to the seller, since it was a lowball offer.
* Francine disclosed information about the flooding basement to the buyer and buyer’s agent. - Mark complied with the buyer’s agent’s instructions to change the available times for
showings so the potential buyer could see the property. - With her client’s permission, Missy shared the entire inspection report with the seller’s
agent.
Josie sees a few blank fields on her loan document. Her lender tells her the document is okay to sign
anyway. Josie should ________.
- Cross through the blank fields
Borrowers should avoid signing any sort of blank document or even a document containing blank lines
or fields.
- Cross through the blank fields
- Initial everything, including the blank fields
- Sign the document
- Trust her lender
Seller Gina feels awful that Martha, who was going to buy her property, lost her job. Gina decides to ______ Martha from the purchase contract.
* Release
With a release, one party to a contract can agree (in writing) to not hold the other party responsible for the contract terms and obligations
- Assign
- Reform
* Release - Rescind
With a release, one party to a contract can agree (in writing) to not hold the other party responsible for the contract terms and obligations
Kendra made an offer on Sam’s property. Sam rejected Kendra’s offer, but made a counter-offer. Kendra is now considering the counter. What role does Kendra currently have in this scenario?
- ** Offeree**
The seller considering a buyer’s offer is an offeree, but if that seller makes a counter-offer, then the seller becomes the offeror, and the buyer becomes an offeree.
- Examiner
- Executor
- ** Offeree**
- Offeror
The seller considering a buyer’s offer is an offeree, but if that seller makes a counter-offer, then the seller becomes the offeror, and the buyer becomes an offeree.
All terms and conditions the client authorizes must be specified and included in an offer to sell or buy. When is it acceptable to offer the property under other terms?
* Never
Regardless of whether you think you could make a much better deal for your client by offering other terms in a sales contract, you must never offer terms other than those specified by your client.
* Never
* Only when your designated broker approves it
* Only when you’re reasonably certain you can get your client a better deal by doing so
* Only when you’re representing the seller
A buyer backed out of a deal, and the seller kept the earnest money deposit. What is this an example of?
* Accepting liquidated damages
All of the answer options are actual remedies to breach of contract, but in this scenario, the seller kept
the earnest money, which is known as accepting liquidated damages.
* Accepting liquidated damages
* Accepting partial performance
* Suing for damages
* Suing for specific performance
The Wells bought a home in Charlotte with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year.
When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. Why did they expect these plantings to be considered part of the real
property?
* Method of annexation
The method of annexation-planting in the ground-implies that the plantings were expected to stay with the land
- Adaptation to the land
- Agreement of the parties
- Intention in placing the item
* Method of annexation
The method of annexation-planting in the ground-implies that the plantings were expected to stay with the land
