Practice Quiz Flashcards
- What are the unities of joint tenancies?
There are four unities “PITT”
1 - Unity of possession - all joint tenants hold undivided possession of the property
2 - Unity of interest - tenants hold equal ownership interests
3 - Unity of time - acquire at the same time
4 - Unity of title - all joints tenants must acquire their interests by the same deed
- How can joint tenancy become tenancy in severalty?
If one or more of the joint tenants dies and only one remains the remaining joint tenant would hold the title in severalty.
- What is the priority of liens?
The priority of a lien determines the order in which debts will be paid off. Real estate taxes and special assessments take priority over all other liens. All other liens are paid in order of priority normally determined by the the date of recording in public records of the county where the property is located.
- What is the process if a person dies Testate?
A person who dies Testate has prepared a will indicating the way to dispose of his or her property after death. Legally when a person dies, title to his or her real estate immediately passes either to their heirs by decent or to the persons named in the will. However the will must be probated and all claims against the estate must be satisfied.
- What are the freehold estates?
Fee simple - highest form of interest entitled to all rights in property. No time limit runs forever and upon death estate passes to heirs. Fee determinable (conditional, or defeasible) - terminates upon occurrence of or nonoccurence of a specified event, future interest is called a possibility of a reverter. Life estate - limited to the life of a specific person. Does not have right to pass along to heirs. Ends with death. Reversionary interest goes back to owner or grantor. Remainderman - goes to someone else. Pur autre vie- on the life of another. Has true ownership
- Which leasehold estate is not a legal object.
Tenancy in sufferance.
- What encumbrance is a product of a court decree?
Judgements. a judgement becomes a general involuntary lien on real property owned by a debtor when it is docketed with the county clerk.
- What are examples of involuntary alienation?
Involuntary alienation includes: Intestate( escheat), land needed for public use ( Eminent domain through condemnation suit), Non-payment of debt (Foreclosure), Open,notorious, continuous, hostile and adverse use ( adverse possession). - Without owners consent. Transfers carried out by operation of law ranging from condemnation of land for public use to sale of property to satisfy tax lien or mortgage lien. - Person dies intestate. Taken over by escheat. - Power of eminent domain - when private property is taken - owner is given an opportunity to challenge money offered. - Transferred to satisfy owners’ debts - debts that can be foreclosed are mortgage loans, real estate taxes, construction liens and general judgements against the property owner. - Partition proceed - one co-owner seeks to force another to divide property
- What ways bridge the gap in the chain of title?
A quitclaim deed is commonly used to bridge the gap in the chain of title.
- Define devise
Devise is the gift of real property by will. the act of leaving real property by will.
- What is a rem proceeding?
If the municipalty forecloses on a tax sale certificate, it is through judicial foreclosure before a court known as a rem proceeding.
- Define a special assessment.
a tax or levy customarily imposed against only those specific parcels of real estate that benefit from public improvements like a street or a sewer.
- Know the difference between a usage encumbrance and a lien.
Liens are financial claims against the property. Physical or usage encumbrances, which include restrictions, easements,licenses and encroachments.
- Define lien?
A lien is a financial claim against property that provides security for a debt or obligation of the property to the owner. If the obligation is not repaid,the lien holder, or creditor, has the right to have it paid out of the property usually from the proceeds of a court sale.
- What are the characteristics of a limited partnership?
Limited partnerships include a general partner and limited partners. Run by general partner or partners.The limited partners are only have liability up to their initial investment.
- What types of buildings would use the cost approach?
The types of buildings would be special purpose buildings like schools,churches and public buildings.
- What is the principle of a cap rate?
It assumes the value of the property is based on its net income. It takes the capitalization rates of similar properties to the relationship of net income. IRV formula includes Net income/capitalization rate equals value.
- What are the three approaches to value and their alternate names?
- Sales comparison approach (Market data approach) Gross rent multiplier if rented (GRM) Sales price/rental income. 2. Cost approach uses reproduction cost, replacement cost and deductions. Physical - normal wear and tear or. Functional obsolescence and external obsolescence. 3. Income approach
- What is the principle of the math formula IRV
Income/rate = value
- What are the steps to the cost approach
- Estimate the value of the land as if it were vacant 2. Estimate the current cost of constructing the building and improvements. 3. Estimate the amount of the accrued depreciation resulting from physical deterioration, functional obsolescence and or external obsolescence. 4. Deduct accrued depreciation from the estimated construction costs of new buildings and site improvements. 5. Add estimated land value to the depreciated cost of the buildings and site improvements to arrive at the total value of the property.
- What is the definition of consideration?
That received by the grantor in exchange for the deed. Something of value that induces a person to enter into a contract. Consideration may be valuable (e.g. money), or good (love and affection).
- What type of agent is found in a standard real estate transaction?
Special agent.
- What is the process for present or transmitting offers?
All written offers must be forwarded to sellers within 24 hours.
- What is the commission rules for exclusive agency and exclusive right to sell.
Exclusive agency - only one broker specified to act as exclusive agent. If any broker brings abuyer the listing broker is still due a commssion, which he or she splits with the selling broker. If the seller finds a buyer with no help from any broker, seller retains the right to sell property without obligation to the broker. Exclusive right to sell listing - one broker is appointed as sole agent of the seller and is given exclusive right to represent the property. Seller must pay broker regardless of who sells if sold while listing is in effect. If seller gives the broker an exclusive right to sell listing but finds a buyer without broker assistance the seller must still pay the broker a commission.
- Define executed and executory.
Executed - a contract which all parties have fulfilled their promises and thus performed the contract or can mean a signed contract. Executory - a contract under which something remains to be done by one or more of the parties. Four stages: 1. Meeting of the minds - executed 2. attorney review - unenforceable 3. After attorney review - executory 4. Closing - executed
- Define assignment and novation.
An assignment - is the transfer of rights and or duties under a contract. Unless contract specifically forbids it rights may be assigned to a third party.Most contracts contain a clause that permits or forbids. Assignor maintains secondary liability if assignee breaches. A Novation - is a substitution of a new contract for an existing agreement.May be between the same parties or a new party substituted (novation of the parties). Old contract is no longer in force.
- What is commission based on an open listing?
Seller agrees to pay broker commission only if a buyer for the property is produced by them. Can enter into as many number of brokers all acting as agents. If seller sells property without the aid of a broler, there is no obligation to pay commission. Does not need a termination date. a subsequent exclusive listing with another broker would automatically terminate an open listing.
- In an assignment, what is important about liability?
Assignor maintains secondary liability if the the assignee breaches contract.
- Define specific performance and liquidated damages.
Liquidated damages represents money agreed to in advance by buyer and seller that serves as compensation if one party does not live up to the contract. If seller defaults buyer has three alternatives: 1. The buyer may rescind or cancel and recover earnest money 2. The buyer may sue for specific performance to force seller to perform or convey the property 3. The buyer may sue seller for compensatory damages. If the buyer defaults: 1. The seller may declare the contract forfeited and retain the earnest money as liquidated damages. 2. The seller may rescind the contract cancel, terminate. This requires seller to return all payments. 3. The seller may sue for specific performance. This may require the seller to offer, or tender a valid deed to the buyer to show compliance with the contract terms or 4. The seller may sue for compensatory damages. New Jersey allows a specific time limit of six years under the statute of limitations. Seller is entitled to keep the deposit if buyer refuses to perform for no good reason. Seller who does not live up
- Be able to recognize business relationships in situations.
General agent - represents principal in broad range of matters within scope of authority. E.g. property manager is responsible for running a large building and hires maintenance personnel. Special agent - authorized to represent principal in one specific capacity. Typically a real estate broker. Client - person employed by the broker in an agency relationship. Seller is the the client, buyer is the customer. Power of attorney - authorized to legally bind attorney in fact. Salesperson acts as agent of the broker and as a subagent of the principal. Unless specifically retained, it is inaccurate for a salesperson to refer to the buyer as a client.
- Define a net listing?
Based on the amount of money the seller will receive if property sold. Broker free to offer at any price. if the property is sold, the broker pays the seller only the net amount previously agreed on and keeps the rest. This tupe of listing is illegal in New Jersey.
- Know examples of a voidable contract.
Seems valid on the surface to be valid, but may be rescinded, or disaffirmed by one of the parties (e.g. a contract with a minor). Contracts signed by a person under duress (force) or undue influence (being taken advantage of) are voidable (may be canceled0 buy such person or by a court. Extreme care should be taken when one or more parties to a contract is elderly, sick, in great distress, or under the influence of drugs or alcohol. to be valid, every contract must be signed as the free and voluntary act of each party.
- Know real estate examples of a unilateral contract.
One-sided.One party makes promise to induce a second party to do something the second party is not legally obligated to act. An offer of an award is an example.
- What is the MLS?
An organization in which brokers share listings with each other.
- Who must act under a unilateral contract?
A unilateral contract whereby one party makes a promise to induce the second party, only the first party is required to act. The offerer of an award must act if the offerer performs.
- What are the essential elements of a real estate contract?
- Competent parties (18+) 2. Offer and acceptance 3. Consideration 4. Legality of object
- What are essential to be included in a real estate contract?
- Contract in writing 2. Competent parties 3. Agreement to buy and sell 4. Adequate description of the property 5. Consideration (price and terms of payment) 6. Grantors agreement to convey (type of deed) 7. Place and time of closing 8. Signatures of the parties
- Define 4 business relationships
- Seller’s agent or subagent - works only for the seller 2. As buyer’s agent - works only for the buyer 3. As a disclosed dual agent - works for both the buyer and seller. To work as a dual agent, a firm must first obtain informed written consent 4. As a transaction broker - a transaction broker works with a buyer or seller or both in the sales transaction without representing anyone and does not promote the interests of one party over another and are not required to keep confidential any information.
- What are the essential elements of a real estate contract?
- Competent parties (18+) 2. Offer and acceptance 3. Consideration 4. Legality of object
- What makes up meeting of the minds.
Taken place when the parties agree on: 1. Price 2. Down payment and. 3. Financing method.
- What is the number 1 primary duty that a fiduciary owes their principle?
Trust and confidence - putting the principal’s interest above all else including the broker’s own interest.
- What is the smallest unit in the rectangular survey system that we talked about?
The smallest unit is the sections. A township is divided into 36 numbered sections. Land is surveyed into six-mile square townships, each with identifying reference numbers. Each township contains 36 square miles.
- Define three types of depreciation.
- Physical deterioration - normal wear and tear: Curable - repairs economically feasible, result in increase in appraised value. Incurable - value of structure does not justify the repairs 2. Functional obsolescense - refers to the physical or design features that are no longer considered desirable: Curable - outmoded fixtures, such as plumbing, are usually easily replaced Incurable - cannot be easily replaced such as an office building that cannot be air conditioned 3. External - also known as economic or locational obsolescence caused by factors not on the subject property such as proximity to nuisance, polluting factory etc. Could not be expected to be cured.
- What are the key environmental hazards and what wre they originally used for?
Asbestos - once used as insulation Lead based paint - 75% of all homes pre 1978 Radon - Especially prevalent in the Eastern US. Remediation needed if > 4 picocuries (PCI) Urea formaldehyde (UFFI) used for insulation Mold - 3 elements. 1 - food source, 2 - moderate temperature and 3 - source of moisture
- How does mold grow?
Mold - 3 elements. 1 - food source, 2 - moderate temperature and 3 - source of moisture
- Under CIRCLA who is responsible for the actual spill?
Landowner is responsible regardless of whether the contamination is a result of landowners actions. Liability includes cleanup of not only the landowners property, but also neighboring property that has been contaminated. CIRCLA established a $9 billon Superfund to cleanup uncontrolled hazardous waste sites. Once the EPA determines PRPs they are responsible for: Strict liability, Joint and Several liability and retractive liability.
- Definition of Material Information.
Responsible for getting as much information as possible for disclosure. Failure to disclose any known defects or any defect that would have been apparent if a reasonable investigation had been made may make the licensee liable for claims levied by the purchaser of the property.
- List Regulation Z (Truth in Lending) advertising disclosures - what needs to be disclosed.
Strict regulations of real estate adverstisements that include financing terms. Liberal credit available is ok to say, but must have the APR, including all charges rather than the interest rate alone. Triggering terms (if any one is used than other 3 further items must be included): 1. Amount or % of down payment 2. Number of payments or period of payment 3. Amount of any payment. 4. Amount of any finance charge Penalties for violation of an administarive order enforcing Regulation Z is $10,000 for each day the violation continues.
- Define the Real Estate settlement Act
Formerly administered by HUD, is now administered by the Consumer Financial protection Bureau (CFPB). It was created to ensure that the buyer and seller in a residential real estate transaction have knowledge of settlement costs. RESPA requirements apply when the purchase is financed by a federally related mortgage loan. Following requirements must be met: - settlement cost booklet - good faith estimate of settlement costs - Uniform settlement Statement - Prohibition against kickbacks
- What is the federal required disclosed hazard?
Under the Lead-based Paint Hazard Reduction Act,persons selling or leasing residential housing constructed before 1978 must disclose the presence of known lead-based paint and provide purchasers and lessees with relevant records and reports. Lead-based paint disclosures statements must be attached to all sales contracts amd leases regarding residential properties built before 1978 and a lead-hazard pamphlet must be distributed to the buyers and the tenants. The purchasers must be given 10 days in which to conduct a risk assessments or inspections for lead-based paint. Purchasers are not bound by any realestate contract until the ten-day period has expired.
- Why must we have lead paint act disclosure.
an elevated level of lead in the body can cause severe damage to the brain, kidneys, nervous system and red blood cells. The degree of harm is related to the amount of exposure and agae at which person is exposed.
- What are the Federal Fair Housing exemptions?
Exemptions are: 1 - Sale or rental of a single family home when the home is occupied by an individual who does not own more than three such homes at one time and when (a) a broker, sales person or agent is not used and (b) discriminatory advertising is not used. 2. - the rental of rooms or units are exempted in an owner occupied one-four family dwelling 3. - Dwelling units owned by religious organizations may be restricted to people of same religion if membership in the organization is not restricted on the basis of race,origin, color, national origin, handicap or familial status 4. -a private club that is not open to the public may restrict the rental or occupancy of lodgings that it owns to its members, as long as the lodgings are not operated commercially.
- What are the Federal Fair Housing exemptions?
Exemptions are: 1 - Sale or rental of a single family home when the home is occupied by an individual who does not own more than three such homes at one time and when (a) a broker, sales person or agent is not used and (b) discriminatory advertising is not used. 2. - the rental of rooms or units are exempted in an owner occupied one-four family dwelling 3. - Dwelling units owned by religious organizations may be restricted to people of same religion if membership in the organization is not restricted on the basis of race,origin, color, national origin, handicap or familial status 4. -a private club that is not open to the public may restrict the rental or occupancy of lodgings that it owns to its members, as long as the lodgings are not operated commercially.
- Define a bridge loan and a package loan
A bridge loan is a temporary loan to allow the purchaser to buy a new home - also known as an interim loan or swing loan. a package mortgage covers the real estate but also all fixtures and appliances on the premises e.g. for a purchased condominium unit.
- Define acceleration clause and and alienation clause.
The acceleration clause provides the lender the right to accelerate the maturity of the debt by declaring the entire debt due immediately as a first step toward foreclosure if borrower defaults. The alienation clause - also know as resale or due-on-sale is usually used to prevent the assumption of the loan. This clause provides on the sale of a property the lender the choice of either declaring the entire debt due immediately or permitting the new buyer to assume. Generally allows themto get the money at closing…
- Define the process of blanket mortage.
Covers more than one parcel or lot and used to finance subdivisions and developments. these include a provision know as a partial release clause, when one of the lots or parcels are released from the lien by repaying a definite amount of the loan.
- Define Amortization.
An amortized loan is payable monthly or other periodic installments over the term of the loan resulting in a zero balance at the end of the term.
- What is the biggest difference between assuming a mortgage and buying subject to a mortgage.
Anyone who purchases real estate subject to a mortgage is not assuming a note or bond and is not personally obligated to pay the debt. The new owner has bought the real estate knowing that he or she must make the loan payments and that on default the lender forecloses and the property is sold by court order to pay the debt. If the sale does not pay off the entire debt, the new owner is not liable for the difference.
- What advertising terms require qualifying information for Regulation Z.
Any offer of financing terms must include the words to a qualified buyer.
- What is the difference between bargain and sale deed CAG and a general warranty deed.
Bargain and sale deed with Covenants for Grantor Acts (CAG) covenants that they have done nothing to encumber the property while they were in possession (normal deed used to transfer property in NJ) and does not warrant for previous owners. Whereas as Warranty Deed or General or Full Covenant provides the greatest protection of any deed. Grantor is legally bound in a Warranty Deed and is usually written into deed.
- Know how to figure out loan to value ratio? What does it mean?
The loan to value ratio represents the ratio between the property’s value and the amount of debt on it. Used in determining amount of down payment required.
- What real estate document is usually never recorded in public records.
Appraisal?
- What does the Bulk Transfer act cover
Protects creditors from fraud. Seller to prepare a list of existing creditors signed by seller. Purchaser should preserve list of creditors for at least six months after the date of sale and make available for inspection by any sellers creditors or record it in public record.
- Define abstract of title and chain of title.
Abstract of title is a condensed history of a title to a particular parcel of real estate. The chain of title is the conveyance of real property from one owner to another dating back to the original grantor.
- What typeof mortgage allows right of rescission?
In the case of most consumer credit transactions covered by regulation Z, the homeowner has three days,including Saturday, in which to rescind (cancel) the transaction merely by notifying the lender. This right of rescission does not apply to to residential purchase-money first mortgage loans.
- What are the lease hold estates?
1 - Estate for years - specific termination date. No notice required at end of lease. 2 - Periodic estates - from period to period and continue for an indefinite period of time without a specific. Automatically renewed for similar intervals. tenant may be evicted or landlord can accept holdover tenancy. 3 - Tenancy at will - right to possession passes for an indefinite period. 4 - Tenancy at sufference - tenant continues after rights have expired/ to hold possession without the consent of the landlord. can be evicted at any time.
- What are the roles in a sale and leaseback?
Owner sells to buyer and becomes lessee, used as a form financing.
- Define net lease and a gross lease.
A gross lease is a lease under which the a landlord pays allpropert charges regularly incurred through ownership, such as repairs, taxes and insurance. A net lease requires the tenant to pay not only the rent but also some or all of the costs such as taxes, insurance, utilities and repairs. Triple net means the tenant pays taxes, insurance and all other expenses except debt service.
- How does an estate for years terminate
When the definite term has expired, the tenant is required to vacate the premises. no notice is required.
- Does a property manager owe anyone fiduciary duties?
The property manager has a fiduciary responsibility to the owner to preserve the property while generating income and enhancing the value of the owners investment.
- Be able to recognize the difference between a void and voidable contract.
A void contract is one that has no legal force or effect because it does not meet the essential elements of contract. One of the essential elements for a contract to be valid is that it be for a legal purpose. A voidable contract is one that seems on the surface to be valid but may be rescinded or disaffirmed by one of the parties, such as a contract with a minor or a contract signed under duress. A voidable contract is considered by the courts to be a valid contract if the party who has the option to disaffirm the agreement does not do so within a prescribed period of time.
- What does a Realtor mean?
A registered trademark reserved for the sole use of members of the National Association of REALTORS.
74 - 80 MATH
SEE HANDOUTS
- What is the status of a contract following attorney review?
Executory
- how is a license issued to a corporation?
A corporation can be granted a license if one of their officers holds a brokers’ license. That person becomes the broker of record for the corporation and is personally responsible for all transactions for which a real estate license is required.
- What is the rule regarding depositing and withdrawing money in an escrow account?
5 days in and 5 days out rule. Prohibited from commingling. Books must be kept showing each transaction, such that creditors can not claim. Broker can take commission if authorized. Must give client receipt and broker keeps a copy. In accordance with federal law, deposits > $10,000 must be reported to the IRS.
- Who may be exempt from having a real estate license?
- Owners handling their own property 2. Attorneys, executors, trustees, receivers, administrators, legal guardians, and others handling real estate under the order of the court. 3. Banks and trust companies 4. Insurance companies
- Define disclosed dual agency.
Although an agent cannot give first loyalty to two or more principals on the same transaction, the New Jersey real estate commission allows a broker to represent both parties in a transaction, provided that the broker obtains the parties written, informed consent to the dual agency.
- What is interstate property?
Any out of state land sold in NJ to residences of the state, are subject to the Real Estate Sales Full Disclosure Act. Chapter 18 goes on to say those engaging in interstate sale or leasing of 25 or more lots must file a statement of record with the CFPB and provides the buyer with a 7 day right of recision.
- Why do we have an REC?
The REC a division of the Dept. of Banking and Insurance was created to protect the public from unscrupulous sales people.
- Can a broker advertise a sellers incentive?
Yes. However a broker cannot advertise a broker incentive.
- What will result in an automatic revocation of a license?
The Commission can promptly revoke a license of anyone convicted of certain crimes, among them forgery, burglary, robbery, and theft and for an indefinite period of time. The commission can also suspend a license for anyone awaiting trial for a number of serious crimes,including kidnapping, robbery, criminal conspiracy and so on.
- Know the protected classes for NJLAD.
Race Creed Color National origin Ancestry Gender Marital - includes domestic partnerships Affectional or Sexual Orientation Mental Religion Legal source of income Not Covered by Federal Fair Housing: Marital status Ancestry Source of Income Exceptions for Rentals - no exceptions for brokers Rooms apt. - restricted to one sex Religious Owner occupant except race
