Practice Exam Flashcards
A person agrees to sell a property for $500,000. The buyer gives the seller $150 as valuable consideration for a six-month option. Which of the following statements is true?
a) the buyer must have at least 20% down
b) the $150 is valuable consideration if the seller accepted it.
c) the buyer must have at least 5% down as valuable consideration
d) the seller cannot accept money for the option
B
The finance charges recorded on the Truth in Lending statements would include all of the following except
a) insurance premiums for mortgage insurance payment
b) loan fees charged by the lender
c) discount points and services
d) recording fees and title insurance premiums
d)
Owner Stan has been defaulting on mortgage payments and owes more than his property is worth. Stan’s lender is allowing him to sell the property for less money than necessary to satisfy the loan. The bank has permitted Stan to do what?
a) commit tax fraud
b) flip the property
c) short-sell property
d) deed the property to HUD
c)
Seller Jim tells his listing licensee that regardless of the offer, he will not sell to any Asian families. How does this impact the listing agent?
a) the licensee could be held liable if he or she knowingly goes along with the request.
b) the licensee must inform all agents regarding the request
c) the licensee must note the request on the MLS
d) the licensee is still required to take the listing
a)
Jack owns a leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis. With what type of property does Jack have?
a) cooperative
b) planned unit
c) a time share
d) condo
c)
Broker Cumbie recieved an offer of $200,500 on a $205,000 listing. After the seller gave the offer to his attorney to review, the broker received another offer. This offer was for $199,000 what should the broker do?
a) wait until the seller acts upon original offer
b) present the offer right away
c) return the offer
d) ignore the offer since it is lower
b)
What do liens and easements have in common?
a) neither can be done without consent of the owner
b) both are encumbrances
c) both are money claims against a property
d) both must be on public record to be valid
b)
Evan lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan covering the entire property. Like the other residents, Evan own stock in corporation and has a lease on his apartment. What is this type of ownership?
a) cooperative
b) time-share
c) planned unit
d) condo
a)
a condo owners holds title to only the individual unit and a co-op owner is the renter
to assign a contract for the sale of real estate means to
a) transfer ones right under the contract
b) allow the seller and the buyer to exchange positions
c) record the contract with the county recorders office
d) permit another broker to act as agent for the principal
a)
think of it as transferring right of owning the house
what type of listing agreement allows the owner to appoint an exclusive agent to sell his property, but retains the right to sell the property himself?
a) exclusive right to sell
b) open
c) multiple listing
d) exclusive agency
d
broker k arrives to present a purchase offer to Mrs. D, an 80 year old invalid who is not always of sound mind and finds her son and daughter in law present. In the presence of Broker K, both individuals persistently urge and even threated Mrs. D to accept the offer, even though it is must lower than the price she has been asking for. If Mrs. D accepts the offer, she may claim later that
a) broker K should not have brought her such a low offer
b) her consumer protections right have been unsurped
c) she was undue duress from her son and daughter and therefore the contract is voidable
d) broker K defrauded her by allowing her son and daughter to see the purchase offer the broker brought to her
c
An option
a) requires the optionor (seller) to complete transaction
b) makes the seller liable for a commission
c) gives the optionee (buyer) an easement on the property
d) does not keep the offer open for a specified time
a
Calders Construction company has built a home in a new subdivision and it was sold 6 months after it was built, for $48,500. The amount reflected a depreciation amount of 3% knowing this, what was the original asking price on the home?
a) 51,500
b) 48,500
c) 53,000
d) 50,000
d
48,500/97%
97% + 3% = 100%
48,500/97% = 50,000
A real estate licensee has a buyer agency agreement. What is the seller in this situation?
a) fiduciary
b) customer
c) agent
d) client
b
an aggrieved party with Fair housing violation claim has how long to file a compliant with the department of housing and urban development?
one year
if capitalization rate on a building that produces a $20,000 annual income is 10% what is the estimated value of building?
a) 220,000
b) 222,200
c) 22,000
d) 200,000
d 20,000/.10 = $200,000
when the grantor does not wish to convey certain property rights, he or she
a) may note the exceptions in the deed of conveyance
b) must note the exceptions after closing
c) may not do so, since the deed conveys the entire premises
d) must convey the entire premises and have the grantee reconvey the rights to be retained by grantor
a
a lot that is 65 feet wide by 80 feet deep will be fenced on BOTH sides and REAR how many linear feet of fencing would be needed?
225
illegal practice of directing minorities to areas populated by the same race or religion is called
steering
a house sale is closed on july 15th. the taxes of $648 for the calendar year (12 months) have been paid. assuming the seller owns the day of closing, what is the total prepaid portion that the buyer will owe the seller?
$300
648/365 (days in a year) = $1.7753 a day seller owns as of 7/15, so only 16 days August is 31 days Sept. 30 days Octo 31 days Nov 30 days Dec 31 days
169 x 1.7753 = $300.03
a mechanics lien is classified as a
statutory lien
the title to real estate passes when a valid deed is
delivered and accepted
discount points charged by a lender on a FHA or VA loan is a % of what?
loan amount
remember kate Loan to Value 80/20
when the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, the payment is called
a balloon payment
if jamies quarterly interest payments are $150 on a 12,000 loan what is her annual interest rate?
150 x 4 ( 4 quarters in a year) = $600
600/12000 = 5%
a bill of sale is used to transfer the ownership of what?
personal property
a property seller signs a listing agreement with a licensee. what is that an example of?
expressed agency
a portion of wendells building was inavadertently built on ginnys land this is called
enroachment
1) it is accidental
2) involves only part of a structure
homeowner tanya acquired the ownership of land that was deposited by a river running through her property by
accretion
think of accredited
how many CE hours?
12
when a prospective buyer makes a written purchase offer that seller accepts, then the
buyer receives equitable title to the property
what type of agency is not allowed in IL
undisclosed dual agency
what provides a buyer with the best assurance of clear, marketable title?
title of insurance
acts that a licensee may perform for a consumer, are informative and clerical in nature and do not rise to the level of active representation of a customer are known as
ministerial acts
think of god and rise
sam and nancy bought a store building and took title as joint tenants nancy dies so sam now owns the store in
severalty
If the owner of the dominant tenement becomes the owner of the servient tenement and merges the two properties, what happens?
the easement is terminated
a person who has complete control over a parcel of real estate is said to own
fee simple
The ____ is the culmination of the real estate transaction
Title closing
which of the following types of ownership CANNOT be created by operation of law, but must be created by the parties expressed intent?
a) tenancy by entirety
b) condo ownership
c) tenancy in common
d) community property
a)
this is a form of ownership that husbands and wives can choose or create by deciding to do so and declaring it as such in contracts and deeds.
the illegal process of a banker refusing to approve loans for a neighborhood based on the racial composition of the area is
redlining
what is not a physicals characteristic of land?
scarcity
owner grace’s property has been foreclosed. after the property was cold for $340,000 she still owed $6,000 to the lender. the lender my be able to get a personal judgement against grace for the $60,000. This is called
deficiency judgement - which allows the lender to attach and foreclose a judgement lien on other real or personal property that borrow owns
the seller listed their property for six months on 2/26 for $522,500. they agreed to pay the listing broker a 7% commission at closing on the agreed upon sale price. a buyer made an offer on the property 3/29 for $510,000. the seller counter offered 4/1 at $517,500 and the buyer accepted with the closing to occur 6/15. How much commission did the seller owe the listing broker?
$36,225
517,500 x 7%
What does not need to be recorded to be valid?
Real Estate Tax Lien
a special warranty deed differs from a general warranty deed in that the grantor’s covenant in the special warranty deed
applies only to a definite limited time
if the seller has a change of heart AFTER accepting an offer and decides not to sell, what applies to the sellers broker?
the broker IS entitled to collect a commission since the seller accepted the offer
a partition suit is used for?
to force a division of property without all the owners consent - typically used when a co-owner of a property wants to sell his or her share
a broker and seller terminate the listing contract. an offer is received in the mail by the broker after the termination of the listing contract. the offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?
there is no current listing agreement
how soon after closing may a broker receive a commission check?
after the transaction is completed and funded
due to the procedure in which mortgage foreclosures occur under state laws, IL is characterized as a
judicial foreclosure state
what is used to clear a defect from the title records?
a quit to quite title
if skylars property has a net income of $5,480 and returns 8% annually, what is the property value?
$68,500
5480/.08% = $68,500
the buyer and seller agreed to a purchase price of $310,500 the buyer received an 80% loan. how much was the buyer’s loan and how did it appear on the settlement?
$248,400
310 500 x 80%
a void contract is one that is
not legally enforceable
the recording of a deed gives?
constructive notice of the ownership of real property
what does not terminate an agency relationship
submission by the agrent of two offers at the same time
if a property sells for $12,100 and gains a 10% profit for the owner, what was the original cost?
$11,000
12,100 x 10% = 1,210
12,200 + 1,210 = 13,310
13,310/12,100 = 1.1 or 11,000
if sarah receives 35% of total commission from her broker and a property is sold for $23,000 what is the commission on a 6% basis?
897
23,000 x 6% = 1380
1380 x 65% = 897
if a home appraised for $93,000 and mr. nickel put downs 20% what is his loan amount?
$74,400
93,000 x 80%
to create a joint tenancy relationship in the ownership of a real esate, there is unities of what
PTIT
possession, time, interest and title
the rights of the owner of property located along banks of river are called
riparian
think of alligators - reptiles
How many square feet is it an acre
43,560
What is the finance math for annual interest
Principal x rates or
Rate x loan
Finance math - principal
Annual / rate
Which of these is a lien on real estate?
Recorded easement
Recorded mortgage
Encroachment
Deed restrictions
Recorded mortgage
A sales contract was signed under duress (threats, violence, constraints, or other action brought to bear on someone to do something against their will or better judgment) which of these describes this contract?
Voidable
Breached
Discharged
Void
Voidable
Hey sponsoring broker receives a check for earnest money from a buyer and deposit the money in the sponsoring brokers personal interest bearing checking account. This action exposes the sponsoring broker to a charge of
Commingling
Notation
Subgroation
Accretion
Commingling
A borrower takes out a mortgage loan that requires monthly payments $875.70 for 20 years and a final payment of $24,096. This is what type of loan
Wraparound
Accelerated
Balloon
Variable
Balloon
When demand for a commodity decreases and supply increases
Price is not affected
Price tends to rise
Price tends to fall
The market becomes stagnant
Price tends to fall
What deed contains 5 covenants?
Warranty
What is TRUE concerning a property held in joint tenancy
A - A maximum of two people can own the real estate
B - The fractional interest of the owners can be different
C- Additional owners may be added later
D - There is always rights of survivorship
D
A real estate broker specializes in helping both buyers and sellers fill in the blanks and negotiate the terms of the contract. Because the broker is an agent of both parties he may not disclose either parties confidential information to the other the broker is acting as
A) buyers agent
B) sellers agent
C) transactional broker
D) dual agent
D
The portion of the value of an owners property that exceeds the amount of the owners mortgage debt is called
Equity
A buyer has an 80/20 LTV (loan to value ratio) and a $5,000 earnest money deposit which will be used at closing to cover part of the down payment. If the purchase of the home is $250,000 how much additional funds must the seller bring to complete the down payment?
A) 45,000
B) 50,000
C) 75,000
D) 20,000
A)
250,000 x 80% = 200,000
20% down = 40,000 + earnest money
A seller wants to net $165,000 from the sale of her house after paying the sponging broker fees of 5% the seller gross sales price will be?
$174,684
165,000 * 5% = 8,250
165,000 + 8,250
How many square feet are in 3 acres?
130,680
The fair housing act of 1968 prohibits discrimination based on
Race
If a borrower must pay $6,000 for points on a loan how many points what is the lender charging for this loan?
Points = divide 6,000/150,000 = 4%
How many acres are there in the N ½ of the NE ¼ and the NE ¼ of the SE ¼ of a section?
A) 20
B) 40
C) 80
D) 120
N ½ of the NE ¼ is 2 x 4 = 8; 640 ÷ 8 = 80 acres; NE ¼ of the SE ¼ is 4 x 4 = 16; 640 ÷ 16 = 40 acres; 80 acres + 40 acres = 120 acres.
A property has a monthly net income of $3,600 and an expected rate of return 9% using the income approach, what is the value of the property?
A) 40,000
B) 640,000
C) 48,500
D) 480,000
3,600 x 12 (months in a year) = $43,200
43,200 / .09 = $480,000
What is a mortgage?
A written contract pledging real property owned to secure a debt
What is agency by ratification?
Agreement formed bw agent and principal after sale is confirmed
When an agent is invested in project outsid did their normal duties is
Agency couple with interest
When a broker is given the right to collect commission no matter what is what type of agency?
Exclusive
What is a quitclaim deed?
Release rights to property in order clear title
Why is the term for restrictions, easements, or liens that give others right to property?
Encumbrances
What is the right to acquire ownership of private real estate for public use?
Eminent domain
Upon sale the instrument that conveys ownership rights to personal property ____ and that dealing with real property is _____
Bill of sale, deed
What is the term for pledging something as a security for a loan without necessity of giving it up?
Hypothecation - allows a property owner to use the property as security for the loan while still occupying it
What is the right to use another land
Easement
What are annual crops planted on real property but considered personal?
Emblements
Think agricultural, think of emblem- attached to land
An estate that is indefinite duration is called
Freehold
Fair market value cannot be established unless considered in?
arms length
Value in use is?
Added property value Based on specific person using it for specific purpose
What % is discount point
1%
How many acres are there in the N ½ of the NE ¼ and the NE ¼ of the SE ¼ of a section?
120
N ½ of the NE ¼ is 2 x 4 = 8;
640 ÷ 8 = 80 acres;
NE ¼ of the SE ¼ is 4 x 4 = 16;
640 ÷ 16 = 40 acres; 80 acres + 40 acres = 120 acres.
640 is one section.
What is gross lease?
Tenant pays rent and landlord pays taxes, insurances, and repairs.
What is net lease?
Tenant pays rent PLUS taxes and insurance
What type of brokerage is when an individual can be paid for brokering a real estate transaction yet represent nether buyer or seller
Transactional
A property has a fair market value $95,000 as asses at 50% of value. The tax rate is $55 per $1,000 assessed. What is the real estate tax for his property?
$2,612.50
$95,000 x 0.50 = $47,500
47,500 / 1,000 (points) = 47.5
55x47.5
Owner of a lot is interested in selling the is 99 x 100. If similar property sells for $36,000 what is the selling price?
9,000.
43,650 in 1 acre.
99 x 110 = 10,890
10890/43650 = 0.25
36,000 (similar) x 0.25
A property sells for 85,000, existing mortgage balance is $17,000 and the sellers closing cost is $1600. What will the broker fee be at 6.5%?
60,875
85,000 x .65 = 5525
85k -17k - 1600 - 5525
What months have 30 days?
April, June, September, and November.
What is police power
Inherent authority to create regulations needed to protect health, safety and welfare.
A regulatory tool that helps communities regulate and control Howland is used
Zoning
A planned unit development pud is a development where land
Is set aside for mixed use purposes such as residential commercial and public areas zone regulations may be modified for pud
What do municipalities used to ease transition from one used to another
Buffer zones
Example hiking trails
What is non-conforming use
It is allowed to continue legally as long as it complies with the regulations covering non-conformity‘s in the local ordinance or until the improvement is destroyed or torn down or the current use is abanded
What is a conditional use permit
It is granted to a property owner to allow a special use of property defined as an allowable conditional use within that zone such as a daycare center in a residential district
What is a variance
A variance provides relief is zoning regulations deprived on owner of the reasonable use of the property
What is a plat map
A plat map is a detailed map that illustrates the geographic boundaries of individual lots. It shows the blacks sections streets public easements and monuments in the perspective subdivision
What is density zoning
Restrict the average maximum number of houses per acre that maybe built within a particular subdivision
Restrictive covenants
Are limitations to the use of property imposed by a pass owner or the current owner and are binding on future grandnties
Land uses controls and regulated through
Public restrictions private or non-governmental restrictions and direct public ownership of land
A subdivision declaration reads, “ no property within the subdivision maybe further subdivided for sale or otherwise and no property maybe use for any purpose other than single-family housing” is an example of
A - an illegal reverter clause
B- R1 zoning
C - conditional use clause
D - restrictive covenant
D
Landowner who wants to use property in a manner prohibited by local zoning ordinance but which would benefit the community can apply for
Conditional use permit
What is not included in public land use controls
Restrictive covenants
Under its zoning authority what may a town legally regulate
The number of buildings
The purpose of a building permit is to
Ensure compliance with municipal regulations
Zoning powers are conferred on municipal governments by
Enabling state acts
A town enacts news zoning code under the new code commercial buildings are not permitted with 1000 feet of the lake a commercial building that is permitted to continue in its former use even though it is built on the Lakeshore is an example of
Nonconforming use
To determine whether location can be put to future use as a retail store one would examine the
List of Permitted nonconforming uses
Is the allowable ethic origins of purchasers illegal deed restriction
No
A restriction in a sellers deed may be enforced by
A court injunction
A man owns a large tracts of land after an adequate study of all the relevant facts the man legally divides the land into 30 lots suitable for residence in the situation the man is acting as the
Sub divider
A map illustrating the sizes and locations of streets and lots in a subdivision is called a
Plat
What is the difference between a plat and a survey
A survey will show any dwellings, buildings or improvements (driveways, fences, pools) located on the property;
A plat usually shows the dimensions of the property before the improvements are made.
In one city developers are limited by law to constructing no more than average of three houses per acre in any subdivision what does this restriction regulate
Gross density
What are common zoning classifications
CAR
 commercial, residential, and agricultural
Permitted land uses housing projections transportation issues and objectives for implementing future control development would all be found in a communities
Comprehensive plan
What is PUD
A development where land is set aside for mixed use purposes such as residential commercial and public areas
Under the federal law designed to protect the public from fraudulent interstate land sales a developer involved in the interstate land sales of 100 or more lots must
Provide each purchaser with a printed report disclosing details of the property
Enabling statues in Illinois
Grants county cities and villages the power to make and enforce local zoning ordinances
Is zoning wi passed by a village conflicts with an existing county zoning law both of the village and the county are home units of government in this situation what is true
The villages law will prevail because municipal ordinances supersede county ordinances under the Illinois constitution
How many hours of pre-licensing do you need in IL
75 hours
Lori has agreed to transact  Real estate Business on behalf of Alex with Alex’s authority. Lori is
An agent
Ownership of real property for an undetermined length time is called
Freehold estate
A subdivision has a Rule that each home in the neighborhood be at least 2,500 SF this is an example of
Restrictive covenant
What describes a transaction broker?
Broker does not represent ether party, but provides general information and services to each
Reversion of title is a feature of what type of interest
Fee simple determinaable
Lumber for a deck that has not been built is
Personal property
The transfer disclosure statement is required on
The of one to four unit residential property
A lessor is
(Landlord)
Which is a broker NOT required to have visible on office sign
Address
Tenant pays landlord monthly rent but NOT responsible for Taxes or insurance is what type of lease
Gross
What is net lease
Net lease tenant pays rent PLUS taxes and insurance
What is a Swing loan
Bridge or gap loan - short term loan that allows borrowers to borrow against their current property in order to buy a new one
What is the purpose of regulation Z 
States APR - To let the borrowers know the true cost of credit
Is sellers points a finance charge
No
When Real estate agents represent the buyer and not the seller of a piece of property, they are engaging in
Buyer agency
Some states have _____ that require agents to disclose who they are representing to buyers
Agency disclosures laws
Potential gross income minus vacancy and collection losses is
Effective gross income
An example of black west thing you would be
When real estate agent alert residence of a neighborhood that their area is changing due unwanted people moving in And they should sell before value fails
Involuntary methods  of conveying a property include all of following except:
Escheat
Averse possession
Quitclaim clause
Condemning
Quitclaim clause
You sold the home near an large airport  The flight patterns have been permanently changed with The addition of a new runway resulting in a 25% loss and property values This is an example of
Economic absolunce
What lien takes priority
This year’s tax real estate
The rights of defaulting a borrower to keep title to a property by satisfying the debt prior to the close of foreclosure is
Equitable redemption
One loan was obtain using 12 properties as Security this type of mortgage is called
A blanket mortgage
A bill of sale is a document used for what
Personal property
What legal description describes a property by starting with an identifiable point and then describe the succeeding sides by direction and length
Metes and bounds
What is the primary purpose of a deed
Transfer title rights
type of real estate that is all inclusive
Fee simple absolute
Ownership of real property for an undetermined length of time is called
Freehold estate
A freehold estate is
Ownership of real property for an undetermined length of time.
A nonfreehold estate has
Determinable end
When does escrow deposit deadline
By the next day
Tenancy by the entireties convey title at the same time must be
Husband & wife
What determines if there is encroachment on a property
Survey
Ripiran rights
Property borders moving water such as river or stream
What document outlines environmental effects caused by new development
Environmental impact report
 interest paid on the accrued interest as well as principal is known as
Compound interest
Reversion of title is a feature of what type of interest
Fee simple determinable
An unlawful detainer action is instigated by
A lessor
Reverse mortgage
- someone with a lot of equity
- someone without a lot of capital
- someone elderly
Lender gives money to the borrower using the home as collateral
Disposition
 Act of selling, willing, transferring, disposing and encumbrancing property
Special purpose property
Churches, schools, cemeteries, govemernt held
Section is measured
640 acres (1 mile x 1 mile)
1 acre is how many square feet
43,560
What Is a Judgment Lien?
liens created by court ir judge
What is severance
Changing of an item from real estate to personal property
