PRINCIPALS Flashcards
1
Q
In 19___, the DRE was organized into __ parts of Division ___ of the Business and Professional Code
A
1943
2 parts (sections)
Division 4
Section 1. Real Estate Law
Section 2. Subdivided Lands Law
2
Q
Commision’s regulation 2770 is about
A
Anyone who advertises real estate service BUT they are not to be considered a broker if any apply:
- ad NOT directed at CA consumer
- Limited to general info
- Includes “not available to persons in CA”
3
Q
Licensee’s who advertise on the internet are required by law to…
A
indicate their license status
4
Q
The main purpose of the CA DRE is…
A
To protect the public
5
Q
Police Power is…
A
The right of the state to enact laws for the order, safety, health, morals and general welfare of the public
And controls land use.
6
Q
To be the CA Commissioner, you must…
A
Appointed by the Governor and…
- Be a broker for 5 years in CA
OR - Posses 5 years related experience in CA during the last 10 years
7
Q
The only unlicensed person who can solicit for the sale of real property is…
A
The OWNER or their legal representative
8
Q
To get an “Original Broker License” you must…
A
- Be actively engaged as a licensed Salesperson for 2 years during the last 5
- Complete 8 classes (5 mandatory and 3 elective)
9
Q
Another way to get the “Original Broker Licencse” is…
A
- Prove you were a CA Salesperson for 2 years
- Prove that you were a Broker in another State
- Major or Minor in College Real Estate
10
Q
A corporation may be licensed as a real estate broker if…
A
An officer of the corporation is a qualified Broker willing to act as the designated Broker-Officer
11
Q
The continuing education requirement after obtaining a license is…
A
45 hours every 4 years
12
Q
____ years after a license expires, all license rights lapse
A
2
13
Q
Salesperson Examination Fee is ___
License Fee is ___
Total Due to DRE is ___
Fingerprint Fee is ___ and due to ____
A
$60
$245
$305
$49 to “Live Scan” company
14
Q
Broker Examination Fee is ___
License Fee is ___
Total Due to DRE is ___
Fingerprint Fee is ___ and due to ____
A
$95
$300
$395
$49 to “Live Scan” company
15
Q
Renewal Fee is
Salesperson ___
Broker ___
A
$245
$300
16
Q
Sections _____ and _____ of the Business and Professional Code constitute the _______
A
10176, 10177
foundation for most license suspensions and revocations
Most are
- Misrepresentation
- False Promise
- Dual Agency
17
Q
A candidate for a Salesperson’s license must…
A
- Be 18 years of age
- Pass the written exam
- Provide proof of legal presence in the US
- Disclose any criminal violation
18
Q
After a license is revoked, that person must….
A
Wait 1 year before applying again
19
Q
What is RE214?
A
The Salesperson Change Application for moving to a different Broker
Must be filed with the DRE within 5 days
20
Q
PRLS is?
A
Prepaid Rental Listing Service
Allows you to get paid for providing a list of rentals
21
Q
What is the Real Estate General Fund
A
-Holds all the money from Exam and License fees and used for DRE Operating Expenses
20% set aside…
- 8% Education and Research Fund
- 12% Recovery Fund
22
Q
The Max liability for the Recovery Fund is
A
ONE transaction up to 50k
TOTAL judgments against one licensee is $250,000
23
Q
How long is the Salesperson exam and how many questions are there? What is the passing score?
A
- 3 hours long
- 150 questions
- 70%
24
Q
How many salesperson examinations can you take if you don’t pass?
A
-Unlimited but application only good for 2 years
25
How do Real Estate Professionals resolve disputes
Arbitrate rather than litigate
26
The "Original Fair Housing Statue" is what year?
1866
27
In ____ Executive Order ____ prevents discrimination based on FHA and VA loans
- 1962
- 11063
28
The Civil Rights Act of ____ also known as ____ or _____ prevents discrimination based on \_\_\_\_
- 1968
- Title 8
- Fair Housing Act
- Race, Color, Religion, or National Origin
29
In \_\_\_\_\_\_\_, Equal Access to Housing in HUD Programs added additional protections based on....
- 1988
- Sexual orientation and Gender Identity
- This only applies to HUD programs
30
Title 8 Exemptions include...
- Privately Owned single family home
- Rental of Apt in owner-occupied 1-4 unit building
- Facilities owned by private clubs and leased to members
- Facilities owned by religious organizations and leased to members
31
Jones v Mayer was what year and what is it?
- 1968
- Affirmed that all discrimination based on race is illegal (except specific Title 8 exertions)
32
Federal law prohibits age discrimination except for...
- Gov designated retirement communities
- Retirement communities 62 and older
- Retirement communities if 80% have a person over 55
- Single family housed and 1-4 unit buildings
- If sold or rented by Owners that have 3 houses or less
33
The pioneer real estate organizations in CA were in...
- San Diego 1887
- San Jose 1896
34
What is a REALTOR?
A local, state and national member of the NATIONAL ASSOCIATION OF REALTORS
35
What is a REALIST?
A member of the NATIONAL ASSOCIATION OF REAL ESTATE BROKERS who are primarily African-American
36
A REALTOR is pledged to follow....
- Code of Ethics
- Standards of Practice
37
What are the steps when facing an ethical decision?
1. Determine the problem
2. Concentrate on pertinent facts
3. Check laws and regulations
4. Specify who stands to gain and lose
5. Explore solutions
6. Make a decision
38
Forms of illegal discrimination include...
1. Misrepresentation
2. Providing unequal service
3. Steering, Blockbusting, Redlining
4. Restricting MLS participation
39
How can a Client descriminate?
1. Refusing a full service offer
2. Removing the property from the market to sidestep an offer
3. Accepting an offer that is lower
40
Home mortgage disclosure act is designed to prohibit what?
Redlining
41
What is the LIVERY OF SEISIN?
The entire bundle of rights. "I own it and I can sell it"
42
What are the 5 Economic Characteristics of Land?
DUSTS
1. DEMAND
2. UTILITY
3. SCARCITY
4. TRANSFERABILITY
5. SITUS (Location, Location, Location)
43
What does "Chattels" mean?
Personal property
44
\_\_\_\_\_\_\_\_\_ changes personal property to real property
\_\_\_\_\_\_\_\_\_ changes real property to personal
Annexation
Severance
45
Are Trade Fixtures like a freezer in an ice cream shop real or personal property?
PERSONAL
46
Building Codes are designed to set \_\_\_\_\_\_
Minimum Standard for the health, safety and welfare of the public
47
What is CERCLA of 1980
Comprehensive Environmental Response, Compensation and Liability Act
The "Superfund" to clean up environmental waste sites
48
What does AD VALOREM mean?
Property Taxes based on assessed value
49
What are RIPARIAN RIGHTS?
RIVERS
- Navigable: Own land to waters edge
- Non-Navigable: Own land to center
- Government owns water
50
What are LITTORAL RIGHTS?
SEASHORE, LAKES, BEACHES
-Own land to average high water mark
51
Water law is based on....
First in time, first in rights
52
What is ACCRETION?
Land increased by natural soil deposits
53
What is EROSION?
Land disappears slowly by water
54
What is AVULSION?
Sudden loss of land by act of nature
55
What is RELICTION
Increase in land due to water receding
56
What is the ALLUVIAL PLANE or ALLUVION?
Delta area where soil deposits from water
57
What is the ALLODIAL SYSTEM
The right of individuals to own property.
It is the opposite of the Feudal System and the foundation of our country.
58
1. What is FEE SIMPLE ABSOLUTE?
2. What is FEE SIMPLE DIVISIBLE?
1. The highest degree of ownership
2. Ownership with conditions attached
59
1. What is a DOWER?
2. What is a CURTESY?
3. What is a HOMESTEAD?
1. Wife's interest
2. Husband's interest
3. Protection against unsecured debts for the party who did not sign the loan
60
What is TENANTS IN COMMON?
Two or more people holding ownership with the right to possess, will or sell
Can be willed.
Not necessarily equal interest
61
What is JOINT TENANCY?
Two or more people holding IDENTICAL interest in a whole property.
Can never be willed.
When one dies, the interest passes to the other owners, not the heirs.
62
What is an ENCUMBRANCE?
An interest in and right to real property that limits the legal owner's freehold interest
Does not include the right of possesion.
63
What is a MECHANICS LIEN?
From a workman on your home for unpaid bills
Back dated from time work was completed
64
What is a MATERIALMAN'S LIEN?
From a lumberyard or supplier of materials on your home
65
1. What is an INVOLUNTARY LIEN?
2. What is a STATUTORY LIEN?
1. Not something a person wants placed on their home
2. Created by the State and local governments
66
What is an INCOME TAX LIEN?
Gov lien when you don't pay your income taxes
67
What is a JUDGEMENT LIEN?
You lost a lawsuit and the lien is placed for payment
68
What is an EQUITABLE LIEN?
contract with property as security for a debt
69
What is a BLANKET ENCUMBRANCE?
A voluntary lien placed over more than one part of a property
70
It is common in CA to use the term mortgage when referring to what?
TRUST DEED
Actual Mortgages are rare in CA
71
A lien that is specific to CA is this \_\_\_\_\_\_\_\_
DESIGN PROFESSIONALS LIEN
72
What is the priority of liens in a foreclosure?
1. Cost of the Sale
2. Property Taxes (Ad Valorem, then Special)
3. First Mortgage
4. All other liens in order of date filed
73
What is an IMPLICATION EASEMENT?
An implied right (you bought the mineral rights to the land do it is implied that you can send a truck to get the minerals)
74
What is a RESERVATION EASEMENT?
The creation of a new right that did not exist before
75
What is a NECESSITY EASEMENT?
Created by a Court (landlocked access etc...)
76
What is a CONDEMNATION EASEMENT?
A judicial proceeding for Eminent Domain
77
What is an EXPRESSED EASEMENT?
Oral or written agreement between parties
78
What is an EASEMENT?
An interest in another's land
```
DOMINANT = person who benefited
SERVIENT = person who is burdened
```
79
What are 3 types of deed restrictions in CA?
COVENANTS
CONDITIONS
RESTRICTIONS
80
What is ESTATE IN LAND?
The degree of one's ownership in land
81
1. What is FREEHOLD ESTATE?
2. What is LEASEHOLD ESTATE?
1. Ownership that lasts a lifetime
2. Renting or Leasing
82
What is a FEE TAIL?
Property inherited by a Monarch. Illegal in US.
83
What is SEVERALTY?
Sole Ownership
84
What is the TORRENS SYSTEM?
A legal system of land registration used to verify ownership without a search of public records
85
What are the ELEMENTS OF A VALID CONTRACT?
1. Legally competent parties
2. Consideration
3. Mutual Agreement
4. Lawful Objective
5. In Writing and Signed by the Parties
6. Contain a Legal Description
86
What is NOVATION?
Substituting a new contract for an old one
87
What is PAROL EVIDENCE RULE?
When parties put their agreement into final written form
88
What does ESCHEAT mean and what happens?
Dying without a will or heirs
Property is automatically owned by State
89
Is BANCRUPTCY voluntary or involuntary?
Can be BOTH
90
1. What is TESTATE?
2. What is INTESTATE?
1. Dying with a will
2. Dying without a will
91
What is the STATUTE OF LIMITATIONS period for bringing legal action on the following:
A. MECHANIC'S LIEN
B. REMOVAL OF ENCROACHMENT?
C. WRITTEN CONTRACT?
D. RECOVER PROPERTY TITLE?
A. 90 DAYS
B. 3 YEARS
C. 4 YEARS
D. 5 YEARS
92
What is a HOLOGRAPHIC?
Will written in Testator's own handwriting
93
What is a NUNCUPATIVE?
Deathbed Will written by someone else like a Nurse
94
What are 5 ways to ACQUIRE or TRANSFER PROPERTY?
1. Will
2. Succession
3. Accession
4. Occupancy
5. Transfer
95
A DEED is not the TITLE but....
Evidence of the Title
Like a Marriage Certificate isn't the Marriage but evidence of it
96
ALIENATION is another term for what?
TRANSFER or CONVEY
97
A Deed transfers ownership from _____ to \_\_\_\_\_
GRANTOR
GRANTEE
98
What is a GRANTOR?
A Seller
99
What is a GRANTEE?
A Buyer
100
What are the 3 elements of a VALID DEED
1. PREMISE (Grantor, Grantee, Legal Description)
2. HABENDUM (Consideration, Limitations, Exemptions)
3. TESTIMONIUM (Signatures, Acceptance)
101
What is the PRINCIPAL OF LACHES?
Bars a claim that is asserted after a statute of limitations runs out
102
Does a Deed need to be recorded?
No, but it it is recorded that protects the GRANTEE's rights
103
What does CAVEAT EMPTOR mean?
Buyer Beware!
104
What are the 3 types of DEED DELIVERY?
1. MANUAL (Grantor \> Grantee, can have conditions that don't involve a 3rd party)
2. RECORDING (County, must be notarized)
3. CONDITIONAL (Specific Event happens first then passed through a 3rd party)
105
What are 6 types of Deeds?
1. Grant
2. Sheriff's
3. Gift
4. Tax
5. Land
6. Trustee's
106
Is a TRUST DEED a deed?
No. It is a pledge of real property as security for a loan
107
What is ESCROW?
A small and short-lived TRUST AGREEMENT involving a neutral 3rd party who is paid
108
Can Broker's conduct Escrows?
Yes, only if they are acting as the agent or principal in a specific transaction
109
What are the 2 forms of Escrow instructions?
1. BILATERAL (same for Buyer and Seller)
2. UNILATERAL (separate)
110
In terms differ, does Escrow or Contract supersede the other?
ESCROW instructions
111
What are the 10 BASIC ESCROW INSTRUCTIONS?
1. PREPARE THE INSTRUCTIONS
2. TITLE SEARCH
3. REQUEST LENDERS DEMAND FOR PAY-OFF
4. REQUEST NEW LOAN INSTRUCTIONS
5. PEST CONTROL REPORT
6. FIRE INSURANCE SETTLEMENT
7. REQUEST CLOSING FUNDS
8. AUDIT FILE
9. ORDER RECORDING
10. CLOSE
112
Can Escrow be terminated by Death?
No.
Only by
1. COMPLETION
2. MUTUAL AGREEMENT TO TERMINATE
3. COURT ACTION
113
What are the 3 main difference between Northern and Southern CA Escrow?
1. Socal signs right after the start, Norcal is just before close of Escrow
2. Socal has independent Escrow, Norcal uses title insurance companies
3. Socal is a 50-50 split in costs, Norcal is paid by Buyer
114
In CA, the fiscal year begins on \_\_\_\_\_\_
July 1
All months are calculated at 30 days
115
The 4 main types of LEASEHOLD ESTATES and how do they differ?
1. ESTATE FOR YEARS
- beginning and end dates
- any length of time
- no notice needed
2. ESTATE FROM PERIOD TO PERIOD
- month to month
- no end date
- must give notice
3. ESTATE AT WILL
- no lease
- either party can give notice at any time
- terminated by death of either party
4. ESTATE AT SUFFERANCE
- tenant stays on through occupancy
- landlord must evict through the court to terminate
116
What is a GROSS LEASE?
Lessee pays flat fee and Lessor pays all expenses
117
What is a NET LEASE?
the tenant pays not only the rent, but also pays maintenance and operating expenses such as taxes, insurance, utilities and repair
Net lease - maintenance + taxes
Net-net lease - maintenance, taxes + insurance
Net-net-net lease - maitenence, taxes, insurance + repairs
118
What is a PERCENTAGE LEASE?
At a Shopping Mall or similar
- Lessee pays flat fee + % of sales
- Lessor pays all expenses
119
A lease must be in writing if \_\_\_\_\_\_\_
longer than 1 year.
if less, can be verbal or written.
120
5 MINIMUM LEASE requirements are?
1. length or duration of
2. amount of rent and date due
3. names of all parties
4. description of the property
5. evidence of landlord-tenant relationship
121
What is the difference between CONTRACT RENT and ECONOMIC RENT?
CONTRACT RENT is the amount to be paid
ECONOMIC RENT is the amount it could yield if available for lease
122
The MAXIMUM SECURITY DEPOSIT is?
- First month's rent
- 2 more months (unfurnished)
- 3 more months (furnished)
123
A security deposit on an apartment/house lease must be returned in _____ days if \_\_\_\_\_\_\_\_
21
no damage or cleaning is required
124
A landlord can terminate a month-to-month rental with what notice?
30 days if less than 1 year
60 days if more than 1 year
no reason needed
125
What is RENTAL OFFSET?
- Spending up to one month's rent on repairs
- Can only do 2x in a 12 month period
126
What is an ESCALATOR CLAUSE in a lease?
parties agree to increases over time for taxes, insurance and maintenance increases
127
Is rent control allowed on non-residential properties?
NO
128
What are the 6 LANDLORD'S RIGHTS AND RESPONSIBILITIES?
1. Habitability
2. Common Areas are Safe
3. Respect Tenant's Quiet Enjoyment
4. Live by Fair Housing Laws
5. Allowed to terminate by serving notice
6. Right to inspect property periodically
129
What are the 4 TENANT'S RIGHTS AND RESPONSIBILITIES?
1. To NOT damage property
2. Give at least 30 days notice
3. NOT interfere with other tenant's rights
4. Keep clean and sanitary
130
Can a landlord evict a tenant himself?
NO. Only the Sheriff can under court order.
131
An Agent is a _________ who is empowered to represent the interests of the \_\_\_\_\_\_\_\_
FIDICIARY
PRINCIPAL
132
What are the 3 ways AGENCY can be created in CA?
1. Agreement
2. Ratification (Principal accepts without prior authorization)
3. Estoppel
133
What is ESTOPPEL?
legally prevents a person from asserting rights or facts that are inconsistent with a previous position made by act, conduct or silence
134
If you are representing a buyer than they are your ______ and the seller is your \_\_\_\_\_\_\_
CLIENT
CUSTOMER
135
Can a Broker represent both parties in a transaction?
YES, if both are aware and agree. this is called DUAL AGENCY.
136
All Broker's and Salesperson's RECORDS must be kept for a minimum of ___ years
3
137
AIDS deaths are exempted from?
Disclosure laws and do not need to be disclosed to a Buyer since it is not communicable just because the person died in the residence.
138
What are the 5 types of Agents?
1. UNIVERSAL: Handles all business of the Principal
2. GENERAL: Handles multiple transactions of the Principal (i.e. selling and managing etc...)
3. SPECIAL: Handles one transaction
4. AGENCY COUPLED WITH INTEREST: When the Agent is a partner or owner in the property too
5. SINGLE/DUAL: Handles one side, or both
139
A BROKER must deposit a Buyer's money in the appropriate account within ___ days
3
140
A COOPERATING AGENT is?
A Buyer's Agent finding a Buyer for another Broker's listing.
141
Do agreements between Broker's need to be in writing?
NO, but agreements between a Broker and Salesperson does
142
Most Real Estate Salespeople are _____________ and responsible for their own\_\_\_\_\_\_ and \_\_\_\_\_
FICA
SS
Taxes
143
A Salesperson will not be considered and employee for tax purposes if....
1. They work on commission
2. Income is based on sales, not time spent
3. Services are pursuant to a written agreement between Broker and Salesperson
144
What is the difference between GRAND THEFT and PETTY THEFT
GRAND is over $950
PETTY is under
145
Can the Commissioner take action before a violation occurs?
YES, if they believe based on evidence that the person is about to violate the code
146
How much notice must someone get before an injunction or restraining order?
5 days
147
COMMINGLING or CONVERSION of $\_\_\_\_\_\_ or more is a Trust Account Violation.
$10,000
148
What is LEVERAGE in Real Estate?
The use of borrowed money to finance an investment
149
What are the 2 parts to a Mortgage Loan?
PROMISE OR PLEDGE TO PAY
COLLATERAL
150
What is a STRAIGHT NOTE loan?
Pay only interest and pay the entire principal at once at the end of the loan
151
What is an INSTALLMENT NOTE loan?
Pay a combo of interest and principal each month
Most Common loan
152
What is a FULLY AMORTIZED loan?
All payments of an Installment loan are EQUAL, and this is when the entire loan is paid off
153
What is a BALLOON PAYMENT?
Some Installment loans have an extra large payment at the end instead of being equal amounts every month
154
What are the 2 parties involved in a Mortgage?
1. MORTGAGOR (Borrower)
2. MORTHAGEE (Lender)
155
What are the 3 parties involved in a DEED OF TRUST?
1. TRUSTOR (Borrower)
2. TRUSTEE (Bank VP)
3. BENEFICIARY (Bank)
156
Under the DEED OF TRUST, the _______ holds the Promissory Note, and the _______ holds the security for the debt
BENEFICIARY (Bank)
TRUSTEE (Bank VP)
157
What is the difference between a DEED OF TRUST and a TRUST DEED?
They are 2 terms for the same thing
158
What is an ACCELERATION CLAUSE?
If the Borrower defaults on a payment, they can call the entire balance due immediately
159
What is an ALIENATION CLAUSE?
When property is sold, the entire loan balance is due
160
What is a SATISFACTION PIECE?
When a borrower pays off the entire loan, the lender is required to provide a certificate (Mortgage)
OR
a DEED OF RECONVEYANCE (Trust Deed) that passes title from the trustee to the borrower
161
What is SUBROGATION?
The substitution of a third person in place of a creditor
162
A monthly loan payment consists of _______ and ______ and if escrowed consists of _______ and \_\_\_\_\_\_\_\_
PRINCIPAL
INTEREST
TAXES
INSURANCE
163
Why are DEED OF TRUST foreclosures quicker than Mortgages?
They are non-judicial and mortgage foreclosures are judicial
164
\_\_\_ DISCOUNT POINTS is required to increase the percentage yield \_\_\_\_%
8
1%
165
What are DISCOUNT POINTS?
An additional charged at the creation of the loan that gives the buyer lower interest rates, but gives the lender fees up front
166
What is a PACKAGE MORTGAGE?
Used exclusively in Condominium and includes real and personal property (refrigerators, stove etc...)
167
What is a WRAPAROUND loan?
Additional financing from a second lender
168
What are 5 DUTIES OF THE BORROWER?
1. Payment of loan debt
2. Taxes
3. Insurance
4. Maintenance
5. Lender pre-approval for major Alterations
169
What is a JUNIOR MORTGAGE or DEED OF TRUST?
Another term for a 2nd Mortgage or Deed of Trust
170
What is EQUITABLE RIGHT OF REDEMPTION and what is STATUTORY RIGHT OF REDEMPTION?
1. Right to clear up debt prior to foreclosure
2. Right to clear up debt following a sale
171
What is a BUDGET MORTGAGE?
A loan that includes:
- PRINCIPAL
- INTEREST
- TAXES
- INSURANCE
172
What is a CONSTRUCTION LOAN?
Lender commits to full amount of loan, but only provides partial funds over time based on progress
Very high interest rates to builders
173
What is a TAKEOUT LOAN?
Long-term permanent financing for a big construction project
174
What is a CONTRACT FOR DEED?
When the Seller finances the buyer who only receives the deed after the loan is payed off.
175
What are 6 FHA LOAN requirements?
1. CASH for downpayment and closing
2. Borrower pays a 1 time insurance premium at closing
3. NO prepayment penalties allowed
4. FHA loans are assumable
5. Must be appraised by FHA-approved Appraiser
6. FHA Regulations set minimum standards for construction and borrowers
176
Does the FHA loan money?
NO, the FHA only INSURES loans qualified borrowers
177
Does the VHA loan money?
NO, the VHA only GUARANTEES loans to qualified borrowers
178
A Veteran's VHA loan basic entitlement is $\_\_\_\_\_\_ and the loan limit is usually __ times or $\_\_\_\_\_\_
$104,250
4
$417,000
Technically, there is no limit, but $417,000 is the max resale on the secondary mortgage market
179
Which allows prepayment penalties - FHA, or VHA?
Neither
180
What is a CAL VET loan?
A loan directly from the State to the Veteran (Borrower)
181
What is a CAL VET Contract of Sale?
Financing instrument where the State buys the property, takes legal title, sells back to you, and transfers it to you with a GRANT DEED after you pay loan, or refinance, or sell
182
What is a NON-RECOURSE LOAN?
NON-RECOURSE CLAUSE?
LOAN
Buyer is not personally responsible for the loan
Property is used as the collateral
CLAUSE
Seller of the security (loan) in the resale market is not liable if the borrower defaults
183
What is a DEFAULT?
Non-payment
184
What is CONDITIONAL APPROVAL?
A written pledge by a lender to lend a certain amount of money.
More formal than a preliminary loan approval.
185
What is UNDERWRITING?
The analysis of the risk assumed in connection with a loan
186
What are APPRAISAL FEES based on?
Based on time and expenses.
NEVER a percentage of the loan.
187
What is an EXCULPATORY CLAUSE?
In a Mortgage: Lender waives right to deficiency judgement
In a Lease: Relieves Landlord of any responsibility for Tenant's personal injury or property damage
188
What are IMPOUNDS?
A fund of the Buyer's money put aside for future taxes and insurance
189
What is DISINTERMEDIATION?
Individuals investing their funds directly instead of placing with financial institutions.
Has a direct influence on the amount of money available for mortgages.
190
What does a SAVINGS & LOAN specialize in?
Specializes in long-term residential loans
191
What is a BANK specialize in?
Specializes in short-term loans (Autos, Mobile Homes, Household loans)
But are becoming more active in Home loans, FHA, VHA
192
What is PARTICIPATION FINANCING?
When an INSURANCE CO has an equity position in a large development and provides a large loan
193
What is a MUTUAL SAVINGS BANK?
Specializes in long-term residential loans in the Eastern US
194
What is FNMA?
Fannie Mae
Federal National Mortgage Asssociation
Sells seasoned mortgages and deeds of trust to investors
195
What is GNMA?
Ginnie Mae
Government National Mortgage Association
Buys FHA and VHA loans
196
What is FHLMC?
Freddie Mac
Federal Home Loan Mortgage Corp
Buys Conventional Loans
197
Who regulates Fannie Mae, Ginnie Mae and Freddie Mac?
HUD
198
What is RECD?
RURAL ECONOMIC AND COMMUNITY DEVELOPMENT
Makes loans in rural areas and small communities outside of Metropolitan areas
199
What counts towards QUALIFYING THE BUYER?
1. Ability to repay loan
2. Mortgage to income ratio
3. Assets
4. Liabilities
5. Debt Coverage Ratio
6. Attitude, hon!
200
What counts towards QUALIFYING THE PROPERTY?
1. Type of property
2. Location
3. Zoning
4. Value Range
5. Neighborhood
6. Age and remaining economic life
7. Condition
8. Clearances
9. Marketability
201
What counts towards QUALIFYING THE TITLE?
1. Abstract and opinion
2. Chain of title
3. Insurance and other terms
202
What is the FEDERAL RESERVE SYSTEM?
A central banking system designed to manage the nation's economy
203
What is the difference between the Federal Reserve buying and selling bonds?
BUYING = more money in markets, interest rates lower
SELLING = less money in markets, interest rates higher
204
A PROMISSORY NOTE is considered to be what?
Personal Property that can be bought and sold
205
What a 3 entities that are part of the SECONDARY MORTGAGE MARKET?
Fannie Mae
Ginnie Mae
Freddie Mac
Selling shares requires a SECURITIES LICENSE
206
Property increases in value due to what?
1. Inflation
2. Intrinsic Value
207
What is PMI?
PRIVATE MORTGAGE INSURANCE
Required for all loans under 20% downpayment
208
The largest private insurer is?
MGIC
Mortgage Guarantee Insurance Corp
209
A lender is not interested in what?
The loan applicant's need for financial assistance
210
What are lenders interested in?
1. current and future property value
2. income of, and income potential of the loan applicant
3. attractiveness of other investments that could be made instead of the loan
211
What are AKA names for SALES CONTRACT?
LAND CONTRACT
LAND SALE CONTRACT
LAND CONTRACT OF SALE
INSTALLMENT SALES CONTRACT
AGREEMENT TO CONVEY
AGREEMENT FOR PURCHASE AND SALE
212
A SALES CONTRACT does NOT require conveyance of what?
CONVEYANCE OF TITLE within 1 year
213
What is an INSTALLMENT SALES CONTRACT?
When the Seller becomes the Lender
214
What is a CONVENTIONAL LOAN?
No Government Guarantees
Minimum 20% down
215
What is SYNDICATE EQUITY FINANCING?
A Mortgage Financing alternative
Syndicates that offer small investors the opportunity to invest in high-yield real estate
216
What is a COMMERCIAL LOAN?
A Mortgage Financing alternative
A straight bank loan based on good credit or some other non-real property collateral
217
What is a Mortgage Financing alternative option that large corporations use to raise money?
Selling Stocks and Bonds
218
What is a LONG-TERM LEASE as a Mortgage Financing Alternative?
Property usable as is
100% of rent deductible as an expense
219
What is a PROPERTY EXCHANGE?
Trading properties that are not mortgaged and involves no financing
220
Article ___ of the Mortgage Loan Broker law requires what?
7
Loan Brokers must give the MORTGAGE DISCLOSURE STATEMENT to a borrower BEFORE they are obligated for the loan.
221
Anyone who makes more than ___ LOAN COLLECTIONS OR collects more than $\_\_\_\_\_ a year , must be what?
10
$40,000
A licensed real estate BROKER
222
In CA, the max rate of interest on a loan is \_\_\_%, or \_\_\_% over the Fed Discount Rate
10%
5%
223
What are the 4 major laws regarding financing?
1. Truth in Lending (aka Regulation Z)
2. RESPA
3. TRID
4. Equal Credit Opportunity Act
224
The 2 major sections of the TRUTH IN LENDING law are?
1. APR
2. Advertising
225
What phrase is an automatic violation of the TRUTH IN LENDING law when advertised without additional details?
NO DOWN PAYMENT REQUIRED
226
What is RESPA?
What year was it crated?
What does it do?
1. REAL ESTATE SETTLEMENT PROCEDURES ACT
2. 1974
3. Endures that the Buyer and Seller are aware of all settlement costs, and prohibits kickbacks for referrals
227
What is the EQUAL CREDIT OPPORTUNITIES ACT?
Prohibits lenders from discriminating against race, color, religion, national origin, sex, family size, handicap, marital status, age or dependency on public assistance
228
LENDERS base lending decisions on what?
1. Incomes
2. Net Worth
3. Job Stability
4. Credit Ratings
229
What is a MORTGAGE DISCLOSURE STATEMENT?
A Form that states ALL information and charges associated with a loan
230
A MORTGAGE LOAN BROKER (Salesperson or Broker) must do what with the DISCLOSURE STATEMENT?
1. Present the Disclosure Statement to the borrower within 3 days of receipt of the application
2. Have the Borrower sign the statement before they are obligated to complete the loan
3. Keep the form on file for 3 years
231
On HARD MONEY LOANS of $\_\_\_\_ or over for first loans, and $\_\_\_\_ or over for Junior loans, the Broker may charge any commission that the borrower will pay.
First Loan: $30,000 and over
Junior Loan: $20,000 and over
232
What is a REAL PROPERTY SECURITIES DEALER?
Anyone acting as a real property securities dealer, or selling securities, or accepting funds to be reinvested in securities.
Must have a Commissioners Permit, and a $10,000 surety bond
233
The Housing Financial Discrimination Act is also know as ______ and does what?
Holden Act
prohibits financial institutions from discriminating, esp. redlining
234
What are the 3 phases of accomplishing SYNDICATION?
1. ORIGINATION
planning, buying, registering
2. OPERATION
sponsor usually manages property and syndication
3. COMPLETION
selling for profit
235
Regulation of REAL ESTATE SYNDICATIONS has gone back and forth over the years, but the _____ oversees it currently?
Dept. of CORPORATIONS
236
What are the 4 types of REAL ESTATE SYNDICATION?
1. CORPORATE (centralized management, limited liability, but big double taxation)
2. GENERAL PARTNERSHIP aka JOINT VENTURE (tax advantages, but no centralized management and big liability)
3. LIMITED PARTNERSHIPS (centralized management, limited liability, tax advantages) most frequently used.
4. LIMITED LIABILITY COMPANY (has a liability limitation)
237
A LIMITED PARTNER is NOT LIABLE as a General Partner unless....?
1. They are both a LIMITED and GENERAL PARTNER
2. They control the business
238
What is a REIT?
REAL ESTATE INVESTMENT TRUST
Sells securities with a minimum of 100 investors
No 5 persons may hold more than 50%
Each share has an equivalent vote
239
What are the 2 types of REIT's?
1. EQUITY TRUST: invests in real estate itself
2. MORTGAGE TRUST: invests in mortgages and other loans for real estate
ALSO - A COMBINATION TRUST engages in both
240
What is REAL ESTATE SYNDICATION, and what is essential to it?
Channeling private savings into real estate investments.
Professional Management is ESSENTIAL
241
What is an APPRAISAL?
An indépendant estimate of market value, insurance value, salvage value, and/or tax value.
242
An APPRAISERS compensation is based on what?
Time spent, never percentage of value
243
What are the APPRAISAL PROCESS steps?
1. Define the PROBLEM
2. Gather, record, verify DATA
3. ANALYZE AND INTERPRET NEIGHBORHOOD/SITE
4. Estimate LAND VALUE
5. Estimate the PROPERTY VALUE (Market Data, Cost, Income)
6. RECONCILE THE VALUE (from the 3 approaches)
7. REPORT final value estimation
244
What are the Appraiser's 3 APPROACHES TO ESTIMATING PROPERTY VALUE
1. Market Data
2. Cost
3. Income
245
What are the 10 PRINCIPALS OF REAL ESTATE VALUE?
1. HIGHEST AND BEST USE
2. SUBSTITUTION: How much would it cost if you purchased an equivalent property?
3. LAW OF SUPPLY AND DEMAND
4. CONFORMITY: The more the property is in harmony with surrounding properties, the higher the value
5. REGRESSION & PROGRESSION: The value of a better property is affected adversely by proximity to a lesser property
6. ANTICIPATION: an increase or decrease in value based on something in the future like rezoning
7. CONTRIBUTION: an increase or decrease in value based on adding or subtracting something like a remodeled kitchen, or a pool.
8. ASSEMBLAGE: combining 2 or more lots into a larger track
9. COMPETITION: when one business attracts another it creates added value
10. CHANGE
246
What is SUBSTITUTION:
A principal of real estate value meaning:
How much would it cost if you purchased an equivalent property?
247
What is CONFORMITY?
A principal of real estate value meaning:
The more the property is in harmony with surrounding properties, the higher the value
248
What is REGRESSION & PROGRESSION?
A principal of real estate value meaning:
The value of a better property is affected adversely by proximity to a lesser property
249
What is ANTICIPATION?
A principal of real estate value meaning:
an increase or decrease in value based on something in the future like rezoning
250
What is CONTRIBUTION?
A principal of real estate value meaning:
an increase or decrease in value based on adding or subtracting something like a remodeled kitchen, or a pool.
251
What is ASSEMBLAGE?
A principal of real estate value meaning:
combining 2 or more lots into a larger track
252
What are the 3 ways to determine REPRODUCTION COSTS?
1. SQUARE FOOT
2. UNIT IN PLACE:
Square foot for most, but some costs are unit based like plumbing fixtures
3. QUANTITY SURVEY:
Only for historical properties and in addition to Square foot and Unit in Place, costs for permits, payroll taxes, builders profits are also included.
253
What are the 3 types of DEPRECIATION?
1. PHYSICAL
2. FUNTIONAL
3. EXTERNAL ECONOMIC
254
What is the difference between EFFECTIVE AGE and CHRONOLOGICAL AGE?
Chronological is actual age in years, whereas Effective age can be reduced by making improvements
255
What is the difference between PHYSICAL LIFE and ECONOMIC LIFE?
Physical is that a building is standing, Economic is that it produces income above the resale value of the property.
256
What are the 4 APPRAISER LICENSE types, how many hours of study, and how many hours of experience is required for each?
Once the person has the hours of education and experience they must pass a licensing exam.
1. RESIDENTIAL (aka LICENSED): Any residential 1-4 unit building up to 1 million in value, or non-residential up to $250,000
- --150 hours edu
- --2000 hours exp
2. CERTIFIED RESIDENTIAL: Any residential 1-4, and non-residential up to $250,000
- --200 hours edu
- --2500 hours exp
3. CERTIFIED GENERAL: Any type of real property
- --300 hours edu
- --3000 hours exp
4. TRAINEE: Must be supervised by a CERTIFIED or GENERAL, who can't have more than 3 Trainees - 150 hours edu
All licenses are for 2 years, and there is continuing eduction requirements every 4 years.
257
How do you calculate the PROPERTY TAX RATE?
Divide the taxes by the assessed value
258
The MILL RATE of $1 is?
.001
To calculate Mil Rate of any amount move decimal 3 LEFT
| (1/1000 of a Dollar)
259
What are the 5 TAXES in CA?
1. PROPERTY
2. SPECIAL ASSESMENTS
3. DOCUMENTARY TRANSFER
4. GIFT
5. ESTATE
260
What is PROPOSITION 13?
Established in 1978, Regulates property taxes as 1% of value at date of purchase (initial cash value), plus a maximum increase of 2% in property value each year (then taxed at 1%).
261
What are PROP 58 TRANSFER EXCLUSIONS that keep property taxes from resetting?
1. Transfer to SPOUSES
2. To a CHILD if a principal residence less than 1 million in value
3. REPLACING due to Eminent Domain
4. REPLACING due to a DISASTER
262
What is PROPOSITION 60?
55 and over can transfer base property tax rate to a new home of equal or lesser value in the same County
263
What is PROPOSITION 90?
Same as PROP 60, but in another County if the County recognizes this propostion.
264
What is a BOOK SALE?
When you fail to pay property taxes, you still own the property, but the owner's name is entered into a delinquent account book and it starts a 5 year time period to pay the taxes, interest, fees and penalties.
Once paid, you are current.
265
What happens 5 years after not paying your property taxes?
The property reverts to the state, and you lose title!
266
What is the STREET IMPROVEMENT ACT of 1911
A special tax assessment levied to improve streets in your area
267
What is the MELLO-ROOS Act of 1982
A special tax assessment levied to finance public services such as waste treatment plants, parks and schools in NEWLY DEVELOPED AREAS
268
What is the process to TRANSFER A MOBILE HOME into REAL PROPERTY?
1. Obtain a BUILDING PERMIT
2. ATTACH it to an approved foundation
3. RECORD A DOCUMENT that confirms it is affixed
4. Obtain a CERTIFICATE OF OCCUPANCY
269
What is SECTION 218 of the tax code?
An owner-occupied residential dwelling is entitled to a $7,000 tax deduction ($70) per year on property taxes
270
What is SECTION 205?
A military veteran who served during a war time is entitled to a $4000 deduction ($40) per year on property taxes
271
Which directions do PRINCIPAL MERIDIANS and BASE LINES run?
PRINCIPAL MERIDIANS run NORTH/SOUTH
BASE LINES run EAST/WEST
272
What are TOWNSHIP LINES?
Lines running EAST/WEST, parallel to BASE LINES but 6 miles apart
273
What is a TOWNSHIP?
A 36-mile area (6x6) formed by the intersection of a township line and a range line
274
What is a RANGE LINE?
Lie on either side of a PRINCIPAL MERIDIAN
275
What are CA's 3 sets of BASE LINES & MERIDIANS starting points?
1. HUMBOLT (Northern)
2. MT. DIABLO (Central)
3. San Bernardino (Southern)
276
What are the 2 basic CA SUBDIVISION LAWS and what are the differences?
1. SUBDIVISION LANDS ACT:
protect buyers from fraud and defines it as land divided into 5 or more lots
2. SUBDIVISION MAP ACT:
requires the mapping of all new subdivisions and defines it as land divided into 2 or more lots
277
What is a LAND PROJECT?
A major development of 50 or more vacant land lots.
Buyers have the right to "COOL OFF" for 14 days after purchase and get out of it if they change their minds.
278
What are the 4 types of COMMON INTEREST DEVELOPMENTS?
1. PLANNED DEVELOPMENT: lots are owned separately, but certain common areas are owned by all
2. COMMUNITY APARTMENT PROJECT
3. CONDOS
4. CO-OPS (aka STOCK COOPERATIVES)
279
What is the LOT & BLOCK SYSTEM?
A legal description for an address
280
What is the METES & BOUNDS SYSTEM?
Describes an irregular piece of property in an area where the LOT & BLOCK system isn't in place
281
What is the RECTANGULAR SURVEY SYSTEM?
A Government System based on intersecting lines
282
What is a PLANNING COMMISSION?
a group of CITIZENS appointed by the city council or board of supervisiors - they ADVISE elected officials on land use issues
283
What is a PLANNING DEPARTMENT?
Professionals working within the city/county government
284
What is a GENERAL PLAN and what are the 3 primary steps?
Outlines specific community goals and objectives:
1. RESOURCE ANALYSIS: recognizes individual characteristics of the community
2. FORMULATION OF COMMUNITY GOALS: most difficult step due to competing and conflicting interests
3. PLAN IMPLENTATION
285
What is BULK ZONING?
Controls building density, over-crowding, set-backs for sunlight etc...
286
What is AESTHETIC ZONING?
Requires new building to confirm to certain types of architecture
287
What is DIRECTIVE ZONING?
Encourages zoning as a planning tool for highest and best use
288
What is ZERO LOT LINE?
When a structure is positioned right up to the property line - usually discouraged
289
What are ENABLING ACTS?
A statuette creating the power or authority to carry out an activity
290
What are the 3 typical ZONING DISTRICTS?
1. RESIDENTIAL
2. COMMERCIAL
3. INDUSTRIAL
291
What is a BUFFER ZONE?
Something like a park that is placed between two types of Zones
292
What is a NON-CONFORMING USE?
Something constructed prior to current zoning laws that is not in compliance. Boards usually allow this until the property is sold then the new owner must bring it up to code.
293
What is an ILLEGAL NON-CONFIRMING USE?
Something that conflicts with the zoning laws already in place before construction. You can seek a variance.
294
What is SPOT ZONING (aka CONTRACT ZONING)?
When a piece of property in one zone is rezoned for other use (ex. A convenience store in a residential neighborhood)
295
What is a CONDITIONAL USE PERMIT?
When a property owner is granted a special use that goes against the zoning (ex: a restaurant in an industrial park)
296
What is INCLUSIONARY ZONING?
An ordinance that requires a builder to set aside a portion of housing units for low-moderate income people
297
What are BUILDING CODES?
sets the standards for the types of materials to be used during construction
298
What is CEQA?
The CA ENVIRONMENTAL QUALITY ACT of 1970
ensures that government agencies take the environment into account when making decisions
299
Code Section ____ requires what for a person signing a deed affecting real property
8206
Right thumb print
300
What is the difference between a MOBILE HOME and a TRAILER?
A Mobile Home is permanent and rarely moves
A Trailer goes places
301
Who can sell brand new MOBILE HOMES?
Only licensed Mobile Home Dealers (not real estate agents)
302
How long are MOBILE HOME loans amortized for?
Usually 15 or 20 years, not 30
303
What are the 5 reasons that allow a MOBILE HOME PARK landlord to evict a tenant?
TENANT IS
1. NOT IN COMPLIANCE WITH LAWS
2. CONDUCT ANNOYS OTHERS
3. NOT FOLLOWING RULES & REGULATIONS
4. NON PAYMENT OF RENT AND UTILITIES
5. HOME NOT KEPT IN REASONABLE STATE OF REPAIR
304
What is MOG?
Mineral, Oil and Gas Brokerage. A Real Estate licensee does not need a special license to work in this area.
305
What must a Real Estate Licensee always disclose to their Principal?
Any material fact that the Agent knows that will affect the Principal's decisions in a transaction
306
Why can't Broker's use a Listing Agreement form where the rate of compensation is pre-printed?
All Broker's commissions are negotiable
307
If there is a change in price or terms of a listing how is best to change it on the listing agreement form?
This must be made on a new form called a PRICE CHANGE or EXTENSION FORM
308
What is another name for the Real Estate Purchase Agreement, and what is it?
DEPOSIT RECEIPT
Contract between Buyer and Seller
Receipt for buyers deposit
Terms of Broker's Commission
Outlines details for Escrow
309
Upon the seller's acceptance of the offer, communication of this acceptance can be by what?
- In Person
- Mail
- Fax
310
Can you make changes to a PURCHASE AGREEMENT FORM (aka DEPOSIT RECEIPT)?
Yes, you can make these in writing and everyone needs to initial it. This has precedence over preprinted parts
311
Under Civil Code Section \_\_\_\_\_, the following 11 disclosures must be set forth to the buyer?
1102
1. Mold
2. Illegal Controlled Substances (previously on property)
3. Local Option (certain cities or counties require disclosure of info about neighborhoods)
4. Natural Hazards (flood area, fire severity, earthquake fault, seismic)
5. Military Ordinance
6. Home Inspection Notice
7. Smoke Detector Compliance
8. Water Heater Bracing
9. Megan's Law (Notice to look at Database available re: Sex offenders)
10. CC&R's if a Common Interest Development
11. Title Insurance Advisory
312
LEAD BASED PAINT DISCLOSER is required for any property built prior to \_\_\_\_\_?
1978
313
Who controls a listing on MLS?
The listing Broker with written permission from the seller.
314
A LISTING AGREEMENT authorizes a Broker to do what?
1. Place a "For Sale" sign
2. Place a property on MLS
3. Cooperate with Sub-Agents and Buyer's Agents
4. Accept a Buyer's good faith deposit on behalf of Seller
315
Can a Buyer withdraw from an offer that is presented to the Seller?
Yes, but it must be before notification that the offer was accepted by the Seller
316
What happens if there is possible METH exposure to a property?
1. Health officials post notice within 48 hours of notification
2. Owner must notify any potential Buyer's or Renter's in writing
3. If Health Officials determine there is no contamination, all notices must be removed within 72 hours
317
Trust Funds are what and include what?
Things of value received and held by a Broker, including:
1. Cash
2. A check used as a purchase deposit paid to the Broker, Escrow, or Title Co.
3. A personal note payable to the seller
4. A pink slip on an automobile
318
A Broker who receives a money deposit in Trust must...
...Within 3 days....
1. Give the money to the Principal
2. Put it in a neutral Escrow account, OR
3. Put it in the Broker's Trust Fund Account
319
If a Broker receives a check deposit, they must...
record a receipt in the trust fund and hold the check in a safe place
320
In CA, checks are accepted as cash, but what is not?
Promissory Notes
(checks that are post-dated)
321
Can a Broker's money be kept in their Trust account?
No, except for the initial $200 or so to open the account
322
What are the 2 Accounts that a PROPERTY MANAGER has?
1. Escrow Account for security deposits
2. Management account for rents and management expenses
323
How is a PROPERTY MANAGER paid?
Percentage of rental income, salary, or flat fee.
Percentage is the most common
324
What is an ESCALATOR CLAUSE?
A contactual adjustment of payments to take into account increases in taxes, insurance, maintenance and other operating costs.
Usually part of a Commercial Lease
325
What are the 7 primary functions of a PROPERTY MANAGER?
1. Budgeting Expenses
2. Showing the Property
3. Renting the Property
4. Maintaining the Property
5. Maintaining good Tenant Relations
6. Handling Environmental Concerns
7. Adjusting rates
326
A Property Manager is usually a ________ AGENT and their first responsibility is what?
GENERAL AGENT
Maximizing profits for the Owner
327
A Property Managers duties to the LANDLORD include....
1. Evaluating the rental market and setting rents
2. Advertising the Property
3. Screening Applicants
4. Obtaining Tenants
5. Tenant Complaints and Conflicts
6. Fiduciary Responsibility to Owner
328
What are the 2 main types of Maintenance that a Property Manager would oversee?
1. Preventative - regular scheduled repairs
2. Routine - tenants ask for a repair
329
What is the licensing difference between an on-site and off-site Property Manager
An off-site Manager must have a Broker's license. This is not required for on-site.
330
In CA, any building with ___ or more units must have an on-site Manager?
16
331
What is the STATUTE OF FRAUDS?
Requires that real estate contracts be in writting. Comes from English law in 1677
The only exception is for leases for less than 1 year - can be oral
332
Is the sale of a business with a building 1 or 2 transactions?
Usually 2 separate even if the Buyer is the same
333
What is a BUSINESS OPPORTUNITY in Real Estate Terms?
A licensee has the authority to sell or lease a BUSINESS
334
What are the elements of a BUSINESS OPPORTUNITY SALE?
1. Bill of Sale
2. Financial Statements (Balance Sheet, Profit and Loss)
335
What is a BULK TRANSFER?
When a business is sold along with it's inventory
The Buyer must give pubic notice 12 days before transaction
336
What is TURNOVER?
The number of times per year that a businesses inventory turns over
337
What is ABC?
ALCHOL & BEVERAGE CONTROL ACT which regulates liquor licenses for business
338
What is a COVERED LOAN?
A consumer loan where the principal loan balance does not exceed the most current conforming loan limit set by Fannie Mae
339
What is the LICENSING AGENCY for the following:
1. Real Estate Brokers
2. Mortgage Brokers
3. Commercial and Industrial Banks, S&L's
1. DRE
2. Dept of Corporations
3. Dept of Financial Institutions
340
Where does the money for the REAL ESTATE FRAUD PROSECUTION TRUST FUND come from and go?
It comes from a $2 fee for every recording of any real estate instrument or document
60% to District Attorneys
40% to Local Law Enforcement
341
Who is the REAL ESTATE FRAUD PROSECUTION TRUST FUND made up of?
1. County District Attorney
2. County Chief Administrator
3. County Chief Consumer Protection Officer
4. Chief Law Enforcement Officer of one local police force (Selected by the Other 3 members) NO VOTING
342
What is the UNRUH CIVIL RIGHTS ACT?
Protects people from being discriminated against because of...
1. Sex
2. Race
3. Color
4. Religion
5. Ancestry
6. National Origin
7. Disability
8. Medical Condition
9. Marital Status (recently added)
10. Sexual Orientation (recently added)
343
Name the one discrimination not covered under Federal Fair Housing Laws or the Unruh Civil Rights Act?
SOURCE OF INCOME
Illegal to discriminate on this in CA under CA Code 12956.2
344
Can a person file for Bankruptcy to get out of being evicted?
Only if they file BEFORE the court ordered eviction notice is received.
345
What regulates COMMON INTEREST DEVELOPMENTS in CA?
DAVIS-STERLING ACT
1. Condos
2. Community Apartment Projects
3. Co-ops
4. Planned Development
346
Can an exclusive use to a common area in a Common Interest Development be granted to an Owner?
Yes, if 67% of all Owners agree
347
In order to withdraw Reserve Funds from an Association, what needs to happen?
2 Board Members must sign off
348
Transferred funds from an Association's Reserve Account to Operating Account must be returned within...
1 year of transfer
349
What is required for an Association to place a lien on an Owner for unpaid Assessments?
Amount exceeds $1800
OR
Delinquent for more than 1 year
350
What is Senate Bill 565?
Allows Domestic Partners to transfer real property without having to have property taxes reassessed and taxed at current rates.
They are now treated the same as Spouses
351
What is included in the NOTICE OF INTENTION for SUBDIVIDED LANDS?
1. Owner's and Subdividers name and address
2. Legal description of land and copies of contracts
3. Any provisions made for public utilities
4. Location of all airports within 2 miles of subdivision
352
HOA's are required to do what?
1. Financial records available for the past 2 fiscal years
2. Current records must be made available within 10 days.
3. All meeting minutes must be permanently available.
353
How often is an HOA required to do a reserve study?
Every 3 years
For anything with a remaining life of less than 30 years
354
HOA Boards can't impose a regular assessment that is \_\_\_% higher than the previous fiscal year
20%
355
HOA Boards can't impose special assessments that are more than \_\_\_% of the budgeted expense unless....
5%
A majority of Owners agrees
356
LANDLORD'S are required to give a month-to-month tenant ____ Days notice
30
357
Sections ____ to _____ of the Business & Professional Code are commonly known as the SUBDIVIDED LANDS LAW
11000 and 11200
358
Can an out-of-state Salesperson solicit customers in CA without a license here?
NO
359
After taking the exam, when you receive the results in the mail, how can you tell the difference if you passed or failed?
If you passed, you don't receive a score and a license application form is included.
If you fail, you receive your score.
360
Can private owners, even if they who exempt from certain regulations, when renting a room advertise against a protected class (i.e. "no children")?
NO
361
Name the 3 steps taken to convert property by EMINENT DOMAINE?
Government must
1. PAY OWNER
2. MAKE FOR PUBLIC USE (Not Business)
3. OWNER HAS DUE PROCESS IN COURTS
362
What are the 3 PHYSICAL CHARACTERISTICS OF LAND?
1. IMMOBILE
2. INDESTRUCTIVE
3. NON-HOMOGONOUS
363
If you cut down trees on your property and sell them, this is considered what?
SEVERANCE (changing real property to personal property)
364
How long after your lease ends do you have to reclaim any trade fixtures?
This is considered PERSONAL PROPERTY and You must remove before lease ends
365
What is MARKETABLE TITLE?
When selling a home and the Title Company finds that the chain of title is free and clear of any liens or problems
366
In CA, an estate in real property may be owned by...
1. SEVERALTY
2. TENANCY IN COMMON
3. TENANCY IN PARTNERSHIP
4. JOINT TENANCY
5. COMMUNITY PROPERTY (with or without survivorship rights)
367
Does a handwritten change to a contract supersede what is preprinted?
Generally (but not always)
368
What are the 3 methods of INVOLUNTARY ALIENATION?
1. ESCHEAT
2. EMINENT DOMAINE
3. ADVERSE POSSESION
369
What is a CONTINGENCY in a contract?
A term or condition in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding
370
If a Lease agreement is ORAL, will Courts enforce it?
NO, it is unenforcable
371
What happens when someone dies without a will, but they do have heirs?
The property will be transferred according to the laws known as the STATUTE OF DECENT AND DISTRIBUTION
372
FEDERAL legislation focuses on __________ ?
Anti-discrimination laws and fair trade practices
373
STATE legislation focuses on ___________ ?
Agency and disclosure requirements, in addition to anti-discrimination and fair trade practices
374
ERNEST MONEY is \_\_\_\_\_\_?
A cash deposit that shows a Buyer's intention to carry out the terms of a contract
375
Until both parties have signed a written agreement, it is just an ______ ?
OFFER
376
What is TACKING ON?
When two or more owners work together to claim adverse possession.
377
If the someone dies without a will but has heirs, what happens?
The property will be transferred according to the laws known as the Statute of Descent and Distribution.
378
What is ALIENATION?
A Real Estate term meaning transfer or convey as in a Deed
379
What are the 3 Basic Methods of DEED DELIVERY?
1. Manual: Grantor \> Grantee
2. Recording: At the County Recorder's Office
3. Conditional Delivery: Involves a specific event happening and through a third party
380
A GENERAL WARRANT DEED contains five covenants?
Covenant...
1. of Seisin
2. of Quiet Enjoyment
3. Against Encumbrances
4. of Further Assurance
5. of a Warranty Forever
381
What are the 4 types of BASIC DEEDS?
1. General Warranty
2. Special Warranty
3. Bargain and Sale
4. Quit Claim
382
What is a SPECIAL WARRANTY DEED?
Promises that the title has been clear during the current ownership but makes no guarantees prior to that
383
Is it necessary for a DEED to be recorded?
No but it is highly recommended to protect the Grantee (Buyer)
384
Who requires a lease to be in writing if more than 1 year (or ends more than 1 year after signing)
CA Statute of Frauds
385
What's the difference between what a Landlord can do to end a lease and evict a tenant if they (a) violate the lease, or (b) haven't violated the lease?
A. 3-day eviction notice
B. 30-day eviction notice, or 60-day if leased for more than 1 year
386
What's the difference between a CLIENT and a CUSTOMER?
An Agent works...
FOR a CLIENT
WITH a CUSTOMER
387
What is AGENCY COUPLED WITH INTEREST?
Agent is given an interest in property. For example the Agent may finance the construction in exchange for having the exclusive listing.
388
What does an Agent owe their Principal?
Care; Obedience; Accounting; Loyalty; Notice (Disclosure)
389
What does an Agent owe their 3rd Party Customers?
Honesty, Accuracy and Disclosure of defects
390
What is RATIFICATION?
an agency relationship is created when the principal accepts the conduct of someone who acted without prior authorization as the principal's agent
391
What is a NET LISTING?
If an Agent sells a home for higher than the agreed upon listing price, the Agent keeps the net amount over that. This is illegal or frowned upon in many states.
392
At what amount does PETTY THEFT become GRAND THEFT?
Over $950
393
in the 1943 case of People v. Sipper, held that...
if a Broker charges a fee for the selection and preparation of a mortgage or deed of trust - this constituted the unlawful practice of law
394
What is CA Penal Code 518-519?
Blackmailing someone to obtain their property
395
What is the difference between a STRAIGHT NOTE (INTEREST ONLY) and INSTALLMENT NOTE?
STRAIGHT NOTE you pay only the interest and pay the entire principal at the end
INSTALLMENT NOTE you pay both interest and principal together in equal payments knows as a FULLY AMORTIZED LOAN
396
re: FORECLOSURE, what's the difference between an MORTGAGE and a DEED OF TRUST
MORTGAGE FORECLOSURE goes through the court system, DEED OF TRUST does not
397
POINTS are what?
In theory, ___ discount points are required to increase the percentage yield on a conventional load by 1%
A way for the lender to give you a lower interest rate, but charge you extra at closing to make up the difference
8
398
What is LEVERAGE?
The principal of investing other people's money (i.e your financing) to buy a home. The lower the down payment, the more highly leveraged the loan is.
399
What is a BUYDOWN loan?
The payment is subsidized at the beginning by a builder or other party for 3 to 5 years, and thereafter, the purchaser takes over and pays the regular payment amount. An ideal Marketing technique for Builders.
400
How does a Veteran or active duty military person (or widow/widower) start the process of obtaining a VA loan?
First, apply for a Certificate of Eligibility to obtain a VA loan. The home must qualify with an appraisal and be issued a Certificate of Reasonable Value.
401
What is the difference between a CONVENTIONAL LOAN and a CONVENTIONAL INSURED LOAN?
CONVENTIONAL has no government insurance and requires a downpayment of at least 20%
CONVENTIONAL INSURED has no government insurance but has private insurance
402
What are the steps set forth for a real property securities dealer? Which Article do the regulations fall under?
The regulations fall under Article 6.
Needs a Commissioner's PERMIT;
an RPSD ENDORSEMENT on a broker license;
and proof of a $10,000 surety bond.
403
What are the criteria for being considered a creditor under Truth in Lending?
At least 5 loans 25x year
404
If you are a licensed real estate Broker, do you also need to a Broker-Dealer license to sell syndicate interests?
No, this is optional.
405
What are the three methods of determining the cost of rebuilding?
Square Foot
Unit in Place
Quantity Survey Method
406
How do you compute the INCOME CAPITALIZATION APPROACH when owning a rental property?
Estimate rental income but subtract vacancy and non-payments
Then add other income (parking spot fees etc...)
Subtract operating expenses
(do not include debt service or mortgage payments)
407
Subdivision LANDS act is the division of ____ or more lots, while the Subdivision MAPS act is the division of \_\_\_?
A Subdivision LANDS PROJECT is the division of ___ or more lots in a rural area?
LANDS ACT - 5
MAPS ACT - 2
LANDS PROJECT - 50
408
What is the INTERSTATE SALES DISCLOSURE ACT?
Regulates land sales between two or more states and requires a developer to obtain a public report from HUD
409
What is the difference between a PLANNING COMMISSION and a PLANNING DEPARTMENT?
COMMISSION is made up of citizens who have been appointed to advise.
DEPARTMENT is made up of civic employees who provide technical services.
410
What is the NATIONAL ENVIRONMENTAL POLICY ACT?
What is the CLEAN AIR ACT?
The National Environmental Policy Act requires an environmental impact report on all projects that use federal funding.
The Clean Air Act makes it mandatory for all businesses, including real estate developers, to meet air quality standards
411
Who do you go to if you are not happy with Zoning and construction issues?
City planning decisions are the duty of the city council or board of supervisors
412
The General Real Estate business is focused on \_\_\_\_\_\_\_\_\_\_\_, while the Brokerage business is focused on\_\_\_\_\_\_\_\_\_\_\_?
GENERAL: consists of the production, marketing, and financing
BROKERAGE: sale, exchange, lease, rental, financing, or managing of real property
413
The REAL ESTATE PURCHASE AGREEMENT is also knows as the \_\_\_\_\_\_\_\_\_\_\_\_?
Deposit Receipt
There are 3 copies, Master, Buyers, Sellers
414
Is is an issue if the RADON tests higher than \_\_\_\_\_?
4 pCi/L Radon and above
415
What is required of the EARTHQUAKE HAZARDS DISCLOSURE?
The seller and agent must provide the Homeowner's Guide to Earthquake Safety booklet and also disclose that a property is in an earthquake zone.
416
Any residential structure built before ____ is obligated to provide a LEAD BASED PAINT DISCLOSURE?
1978
417
When were CARBON MONOXIDE meters required in residential dwellings?
July 1, 2011
418
IF a broker accepts a check (or promissory note) as an earnest money deposit, they must....?
1. Make full disclosure to the Seller
2. Follow the Buyer's written instructions (i.e. hold check and don't deposit if instructed until acceptance of offer)
3. Record a receipt
419
Post dated checks are considered ___________ and should not be accepted as Earnest Money Deposits?
PROMISSARY NOTES
420
A Broker opening a TRUST ACCOUNT will typically put only about $\_\_\_\_\_\_ in it just to open?
$200
421
Advance Fees for a Loan Secured by Lien on Real Property, is illegal. What are the penalties?
PERSON
$10,000
6 months prison
CORP
$50,000
422
TRUST ACCOUNTS are governed by what regulations?
California Business and Professions Code Section 10145
Commissioner's Regulation 2832
423
What is the main difference between an ESTATE FOR YEARS, and an ESTATE FOR PERIOD TO PERIOD?
The YEARS lease just ends and that's it. No need to give notice.
Only the PERIOD TO PERIOD tenant must give notice. If they don't, it automatically renews or goes month to month.
424
what is ABC?
ALCOHOL AND BEVERAGE CONTROL ACT
Rules that involve the sale of a liguor license when selling a BUSINESS OPPORTUNITY
425
What is a Bulk Transfer?
When unsold inventory is part of a sale of a business. The Buyer must give public notice in a general newspaper 12 days before the transfer to allow creditors the opportunity to file a claim.
If they don't do this, the sale is still valid but creditors can still file a claim.
426
What is GOODWILL and how is it protected in Business Opportunity transactions?
The expectation that customers will still come.
The goodwill of a business has monetary value, which is protected by law.
427
What does the BALANCE SHEET for a pending Business Opportunity sale show?
ASSETS, LIABILITIES and NET WORTH
Profits are shown on a Profit and Loss Statement.
428
What is a BUSINESS OPPORTUNITY?
The sale of both a business, and the real estate. Usually this is done in 2 separate but concurrent transactions.
429
The REAL ESTATE FRAUD PROSECUTION FUND COMMITTEE is composed of who?
COUNTY...
- DISTRICT ATTORNEY
- CHEIF ADMINISTRATIVE OFFICER
- CHEIF CONSUMER PROTECTION OFFICER
- CHEIF LAW ENFORCEMENT OFFICER (of one law enforcement agency who receives funds, chosen by the other 3)
430
Who gets the money collected for the REAL ESTATE FRAUD PROSECUTION FUND?
60% DISTRICT ATTORNEY
40% LOCAL LAW ENFORCEMENT
431
The CA UNRUH CIVIL RIGHTS ACT prohibits discrimination based on what 10 factors?
Sex;
Race;
Color;
Religion;
Ancestry;
National origin;
Disability;
Medical condition;
Marital status;
Sexual orientation.
(THE LAST 2 WERE NEWLY ADDED)
432
per Assembly Bill 1099, What property can be added that will not cause your property tax value to be reassessed?
An active SOLAR ENERGY SYSTEM
433
How would a seller's loan balance to be paid off at closing be recorded on a closing (settlement) statement?
As a DEBIT TO THE SELLER
| (The seller must be charged for what is still owed on the loan balance)
434
Never include the _______ on a legal description of a property. Use the _________ instead?
ADDRESS
LOT & BLOCK SYSTEM
435
Calculating Taxes is based on a ____ calendar?
Each month is counted as ___ days?
360 DAY
30
436
What does PAID IN ARREARS mean?
Payment is made at the END of a period, after completion
Principal and Interest on a mortgage are paid in ARREARS
437
What is a STRAIGHT NOTE?
A loan that is interest only and then the principal is due in one balloon payment at the end.
438
When a Bank charges POINTS for a loan, 1 pt. = \_\_\_%
1 pt = 1%
439
What is ESCHEAT?
In Common Law when a person dies without heirs, their property transfers to the state.
440
What is OSTENSIBLE AGENCY?
An implied Agency relationship based on the actions of the parties - but no written agreement
441
Mobile homes manufactured ___________ are required to have tags guaranteeing proper construction. Who issues this tag?
After June 15, 1976; HUD
442
What is a COVENANT OF FURTHER ASSURANCE?
The Seller promises to take care of defects in the deed
443
What is DIRECTIVE ZONING?
a planning tool to use land for its highest and best use
444
What is article 5 of the CA Business and Professions Code?
Addresses brokers accepting funds from lenders. Lenders paying brokers when the broker does not own the loan is not permitted.
445
When is it permissible for a broker to possess an out-of-state trust account?
It is only permitted if the FDIC insures the account, and the account is used only for specific first loans.
446
Is a rental Lease valid if only the Leasor signs?
YES
447
What is section 205 of the Revenue and Taxation Code?
A property tax exemption for active duty or honorably discharged MILITARY PERSONNEL
448
What is THRESHOLD REPORTING?
Quarterly and Annual reporting required if making more than 25 loans or more than 1 Million in loans
449
What is exempt from the NATURAL HAZARDS DISCLOSURE?
A Geological Hazzard
450
Personal property sales over $\_\_\_ must be in writing?
$500
451
When is a real estate licensee considered a creditor?
When an owner is selling under a land contract or purchase-money mortgage, he may use his broker to help determine if the buyer is creditworthy. If the broker routinely performs this task, the broker can be considered a creditor.
452
If an unlicensed person acts as a real estate salesperson...
he or she will be guilty of a MISDEMEANOR
453
What is Easton v. Strassburger?
a real estate broker employed by the seller must DISCLOSE facts if they know about them, or reasonably should know
454
PC 639-639a covers...
The bribery of a lender to obtain credit
455
How long must a Broker keep records?
3 years
456
What are the 3 Major Categories of Lenders in CA?
INSTITUTIONAL (Banks, Life Insurance Co)
NON-INSTITUTIONAL (Mortgage Lenders, REIT, Credit Unions, Private, Pension Funds)
GOVERNMENT (FHA, VA, CAL VET)
457
Can Banks, Title Co's and Attorney's be ESCROW HOLDERS?
YES
No special permit is needed
458
REGULATORY ETHICS STANDARDS:
ARTICLE 1
ARTICLE 2
ARTICLE 5
ARTICLE 9
ARTICLE 12
ARTICLE 16
1. PROTECT CLIENT
2. DISCLOSURE
5. LENDERS CAN'T PAY BROKERS
9. GET IT IN WRITING
12. TRUTH IN ADVERTISING
16. RESPECT AGENCY RELATIONSHIPS
