Principles & Law True/False Flashcards
Recording is essential to the validity of a deed.
False
In order for a deed to be valid it must be signed by two witnesses.
True
Acknowledgment by a notary is required for a valid deed.
False
When taking a credit application it is ok to ask the applicant’s current number of dependents.
True
It is acceptable for a loan officer to ask if the applicant is widowed or divorced.
False
An appraiser trying to determine the highest and best use would NOT require that the use be the current use.
True
The highest and best use of a property must be legally permissible, financially feasible, and compatible with adjacent properties.
True
A condominium & detached single-family dwelling are similar in that owners of each pay separate mortgage & property taxes.
True
A utility company uses condemnation to get the right to use the rear 5 feet of property. The right held by the power company is an encroachment.
False: its an easement
The surplus of a 310 foreclosure sale is paid to the clerk of the court.
True
A lease expires. The tenant sends a rent check to the landlord. There has been no communication between the landlord & the tenant. The tenant holds a tenancy at sufferance.
True
The secondary mortgage market was developed to provide a constant source of funds for real estate loans
True
The secondary mortgage market is a regulatory agency.
False
According to the telephone consumer protection act of 1991, a licensee may NOT call residences before 8am or after 9pm local time.
True
The Telephone consumer protection act of 1991 is a state law & the Florida Department of Agriculture & consumer services maintains the State’s “Do Not Solicit” list.
False
A broker is looking to purchase an existing building for a real estate office. In order to comply with the Americans with Disabilities Act (ADA), the broker is required to provide separate bathrooms for the handicapped.
False
The fair housing act of 1968 prohibits discrimination based upon race, with a few exceptions & the anti-discrimination act of 1866 allowed ALL citizens to own, buy, & sell real estate.
True
The fair housing act of 1968 did NOT prohibit discrimination based upon disability.
True: disability was added in 1988
In a contract for deed, title transfers at closing.
False
Buyer & Seller entered into a contract for deed. Buyer receives title upon final payment.
True
Radon disclosure in the state of Florida must be given to tenants leasing for a period of 30 days or less.
False: more than 45 days
The required radon disclosure specifies that information regarding radon may be obtained from the County Health Department.
True
Title insurance protects the insured against damage that results from a forged deed.
True
The articles of incorporation create a unit boundaries, operating budgets, bylaws & other governing rules in a Florida condominium.
False: is the Declaration
A condominium is created by filing a declaration.
True
Recording at the county is NOT required for a valid deed.
True
A major benefit to the manufacturer owner of a sale-leaseback is the ability to expand with easy access to cash without borrowing.
True
According to the landlord act, the landlord must notify the tenant within 30 days of termination in the event landlord is claiming any portion of the deposit.
True
The landlord act requires each landlord to return 100% of the deposit within 10 days of termination.
False
The primary purpose of a quitclaim deed is to clear clouds on title.
True
A tenant wants to renew a long-term lease on a property that the landlord is planning to sell soon. The agent should put a cancellation clause into the lease to allow the landlord to cancel the lease upon the sale of the property.
True
A primary benefit of operating as a corporation is less paperwork and fewer formalities.
False
A primary benefit of operating as a sole proprietorship is less paperwork and fewer formalities.
True
A conventional loan is neither insured nor guaranteed by the federal government.
True
Subject is 5 bedrooms in better condition than the comparable sale. Condition is worth $1,000. The value of a bedroom in the market is $3,000. Comparable is 4 bedrooms in worse condition that sold for $62,000. Adjusted value of comparable is $58,000.
False:
$62,000 (comp price)
+ $3,000 (bedroom)
+ $1,000 (condition)
= $66,000
An appraiser is trying to estimate the cost to rehab a Victorian style house. Reproduction cost would be the most appropriate method to estimate the cost new.
True
When making percentage adjustments on an appraisal, the first adjustment is physical characteristics.
False:
Financing & conditions of sale
A mortgage banker is most likely to issue a mortgage loan from its own funds and sell it to a long-term investor.
True
A mortgage with a 15-year term with payments based on a 30-year schedule is said to be fully amortized.
False:
Partially amortized
In order for a property to qualify as a comparable sale, it must be a genuine arms-length transaction.
True
A company’s quick ratio is an indicator of a company’s ability to satisfy short term obligations.
True
Business broker has been asked to perform an analysis of Seller’s business. Broker calculated the value of the current assets, subtracted current inventories, and divided by current liabilities. Broker computed the company’s quick ratio.
True
The lower the quick ratio, the better the position of the company.
False:
The higher the ratio the higher the ability to satisfy short term obligations
A sensitivity analysis is a technique that analyzes risk by measuring anticipated returns using best case, worst case, & most likely case scenarios.
True
Intangible assets of a business include goodwill, trademarks, licenses, & patents.
True
Improvements, trade fixtures, & inventory are intangible assets.
False:
They are tangible
Broker is performing an analysis of an apartment building. Broker has noticed that the owner has recently replaced the roof, replaced the HVAC, & completed extensive landscaping. These are classified as capital improvements.
True
The cost of capital improvements will be included in the property’s operating expenses.
False
Utilities, management fees, & interior maintenance are classified as operating expenses.
True
Investor is in the 32% tax bracket. This year investor had $550,000 Gross Operating Income; $368,000 Operating Expense including $18,000 Reserves for Replacement; $30,000 Depreciation; $102,000 Debt Service of which $100,000 was Interest. What is Investor’s Income Tax Expense & After Tax Cash Flow?
$22,400 income tax expense; $57,600 after tax cash flow
$550,000 Income - $368,000 Operating Expense = $182,000 NOI;
$182,000 NOI - $102,000 Debt Service = $80,000 Before Tax Cash Flow;
$182,000 NOI + $18,000 Reserves - $100,000 Interest - $30,000 Depreciation =
$70,000 Taxable;
$70,000 Taxable Income x 32% tax bracket =
$22,400 Income Tax Expense;
$80,000 Before Tax Cash Flow - $22,400 Income Tax Expense =
$57,600 After Tax Cash Flow
Long term capital gain is the taxable profit from a sale computed based upon total gains & recapture of depreciation.
True
To compute the taxable income of an investment property, add depreciation & interest to the Net Operating Income.
False:
Add reserves and subtract depreciation & interest from the net operating income
The yield to an investor who places a mortgage for 92% of the balance at 12% interest is 12.5%
False:
13%; placing for 92% is the same as charging 8 points = 1% yield increase (1/8% yield increase per point)
Straight line depreciation is the same amount of depreciation each year.
True
The process of individual investors bypassing financial institutions to get higher yields in real estate or other investments is known as disintermediation.
True
Consumers in a marketplace are putting money into savings institutions instead of higher yielding but more risky investments. This is an example of intermediation.
True
Mr. Jones, age 62, purchased a property in 1966 for $62,000. He recently sold it for $480,000 with a 7% commission going to the broker. One month prior to sale he replaced the roof for $4,200. Mr. Jones will be required to spend how much for his next home in order to limit or avoid capital gains tax?
$0; there is no requirement related to purchase of another home
Net operating income minus debt service minus income tax expense equals after tax cash flow.
True
A property is valued at $1,025,000 with an 80% mortgage. The net income is $96,000 with an annual mortgage constant of .10. What is the equity dividend rate?
7% Equity dividend rate (cash on cash) = Before tax cash flow / cash invested (equity)
$1,025,000 x 80% = $820,000 mortgage x .1 = $82,000 debt service;
$96,000 income - $82,000 debt service = $14,000 cash flow;
$14,000 / $205,000 equity = .0682% = 7% equity dividend rate
Net operating income divided by total debt service = debt service coverage ratio.
True
If the debt service coverage ratio is less than 1 the property has a positive cash flow.
False:
that a negative cash flow
A $100,000 home has an 80% mortgage at 12% for 25 years. The MONTHLY mortgage constant is .010532. What is the annual debt service?
$10,110
.010532 x $80,000 = $842.56 monthly P&I x 12 = $10,110 annual debt service
In the cost-depreciation approach to value the building & the site MUST be valued separately.
True
The difference between budgeted & actual operating income & expenses is known as operating business risk.
True
Static risk can be protected by insurance.
True
A competitor has hired someone to steal trade secrets. This is an example of static risk.
False:
This is dynamic risk
The business is suffering reduced cash flow due to increased property tax rates. This is an example of dynamic risk.
True
A condominium has been sold for the first time by a developer. The purchaser has a 3-day right of rescission.
False:
They have a 15-day right of rescission
Broker hires licensed assistant & offers $7 per hour & 20% of all commissions earned. The broker MUST pay all commissions & earned. The broker MUST pay all commissions & follow through.
True
The monthly sales report & annual sales budget are two financial statements indicating the relationship of current sales to sales goals.
True
A licensee is selling her own home. She must either use her broker’s name (if listed) or disclose her licensed status before serious negotiations.
True
A branch office registration is expiring soon. The broker must register before expiration & every year thereafter.
False:
Every 2 years
A new broker opens up a trust account. Binders from multiple transactions must each be deposited into a different account.
False:
They can be deposited into this one account
An owner has listed with Broker A & Broker B. Broker A presents an offer within the listing terms, but owner sells to Broker B buyer for cash. Broker B will receive a commission.
True
One benefit to the broker of having sales associates employed as independent contractors is that the broker DOESN’T pay social security tax.
True
A sales associate’s license expires on March 31. She changes her home address on March 1st. She should send a note listing her new address along with her renewal.
False:
Must notify within 10 days
An unlicensed person, with the expectation of receiving a commission showed property to a buyer who never bought. The unlicensed person is subject to a $5,000 fine & criminal prosecution as a 3rd degree felony.
True
A sales associate who sues a consumer for collection of a commission has violated Chapter 475.
True
Broker has had a complaint filed against her. Broker goes to a witness & offers a bribe to not testify. The action is a misdemeanor of the 3rd degree.
False:
It’s a misdemeanor of the 2nd degree
Agent went to an extended vacation & gave a list of referrals to Broker. Broker mailed several referral fees to Agent. Agent returned & immediately left to work for another Broker. The other referrals must be paid to the new Broker.
False:
Broker is fine paying old & also paying future referrals
A broker guaranteed that title was merchantable. The penalty is suspension & fine.
True
Broker violated USPAP. Broker is subject to administrative penalties under Chapter 475 F.S.
True
A broker offering rental services is required to deliver the prospective tenants with a rental receipt agreement.
True
A broker has a fiduciary relationship based upon the licensed status from the Florida DBPR.
True
A broker & 2 CPAs are opening a real estate brokerage. One CPA will be an officer & the other will be a director. The CPAs are allowed to list & sell real estate.
False:
They can act like an officer and a director
Commissioners & hearing officers may issue subpoenas under the Administrative Procedures Act.
False:
The DBPR & Administrative law judges may issue subpoenas
A sales associate is going to work for an owner-developer with properties in different areas. The sales associate will obtain a group license.
True
A broker has a commission lien upon the owner’s net proceeds from the disposition of residential real estate.
False:
Commercial Real Estate
The Florida Commercial Real Estate Sales Commission Lien Act provides that when a broker has earned a commission by performing licensed services under a brokerage agreement, the broker may claim a lien against the subject real estate.
False:
The lien is against the owner’s net proceeds
In a non-residential sale, the broker may designate sales associates to act as single agents for different customers in the same transaction.
True
A broker may designate sales associates to act as single agents for different customers in the same transaction as long as the parties have a net worth of $1 million or more.
False:
They must have assets of $1 million or more
A disclosure is required if the broker intends to designate sales associates to act as single agents for different customers in the same non-residential transaction.
True
The broker MUST take commissions from the trust account & put into the general account.
False:
They MAY do so
FREC has the power to investigate the legislature & its activities.
False
FREC has the power to impose fines up to $5,000, impose administrative penalties (suspension, etc.), & create its own bylaws.
True
FREC is going to hold a hearing. Any interested party may attend.
True
In total, $150,000 can be paid out of the Recovery Fund as a result of one licensee.
True
Binder money shows up on the seller’s closing statement only if received by seller prior to the closing date.
True
Partnership brokerage formations including a broker & non-licensee are NOT allowed.
False
In order for a partnership brokerage formation including a broker & non-licensee to be acceptable, the broker, non-licensee, & partnership need to be registered & the non-licensee must NOT as a broker.
True
A broker is allowed to have multiple licenses if serving in a non-brokerage capacity as an officer or partner in a different corporation or partnership.
True
Appraiser is appraising a property with a 10 year old roof & a 20 year life expectancy. Appraiser estimates the roof is 1/3 deteriorated. What is the effective age of the roof?
6.67 years. 20 year life x 1/3
The current organizational trend is to decentralize.
True
The penalty for false advertising is a $10,000 fine & revocation.
False:
Fine is up to $1,000 & suspension
Broker manages many beachfront condos. Broker advertised condos available for $1,000 per month rent, even though none were currently available at that rental rate. This is legal.
False:
It is not legal because none are available for $1,000 per month
An attorney tells Broker that title is unmarketable. Broker must disclose this fact before taking a deposit.
True
Buyer decided to have a lead-based paint inspection. Seller will be charged at closing for the inspection.
False:
Seller is not obligated to pay for the inspection
A $25,000 lot was listed by Broker at a 10% commission. Broker is aware that a recent zoning change has substantially increased the value of the lot. In order to avoid suspicion, Broker had his wife purchase the property in her maiden name without disclosure of the relationship or the zoning change. Broker is guilty of concealment.
True
Broker listed 10,000 acres & agreed to “work it” in Georgia & 5 other states. Broker only worked it in Georgia but didn’t tell the seller. They found a buyer. The seller does NOT owe a commission because Broker did NOT perform as agreed.
True
Broker wants to make sure he is not responsible for business assets & liabilities should it fail. Broker should choose sole proprietorship.
False:
Corporation
The recovery fund can be used when an agent is not paid a listing commission.
False:
A business or individual is damaged financially by a licensee
A shopping mall lease is likely to include a percentage clause.
True
A property rents for $400 a month. Local properties in the area rent for $525. The gross rent multiplier (GRM) in the area is 130. What is the amount of obsolescence?
$16,250. 525-400 = 125 monthly rent difference x 130 GRM = 16,250
A sales associate tells a seller to pay the sales associate directly. The broker does not know about it. The sales associate is liable for an illegal action.
True
A broker signs an exclusive agency listing with a seller. Without terminating the agreement, the seller later signs an exclusive right to sell with another broker. The new broker finds a buyer. The first broker does nothing. The seller must pay both brokers.
True
A buyer calls a listing agent and makes a verbal offer to buy. This offer is binding and enforceable.
False:
It is unenforceable
A licensee cannot render an opinion that title is good, or merchantable, except when correctly, based upon a current opinion of a licensed attorney.
True
A real estate licensee cannot sell their own real estate.
False
An unlicensed secretary is aware that the broker took binder money out of the trust account and put it into the business account. The secretary is cable because she is aware of the violation.
True
An unlicensed assistant may read pre-printed information about a property to prospective buyers.
True
A broker opens a new principal office. The broker must obtain a new license.
False:
The broker must register the new address with the DBPR
The most important consideration, when determining depreciation for a wasting asset, is the cost of the asset.
True
A good income producing, tax, sheltered investment property will deliver positive before tax cash flow for most years of ownership.
True
Market value is determined based upon undo stimulus.
False:
Market value assumes that the price is not affected by undue stimulus
Appraiser is analyzing an income producing property with 80 1-bedroom apartments and 40 2-bedroom apartments. The 1-bedroom apartments rent is $475 per month with a vacancy rate of 2.5% and the 2-bedrooms rent is $600 per month with a vacancy rate of 10%. What is the annual gross income?
$703,800
80 x 475 x 12 = 456,000
456,000 - 2.5% = 444,600
40 x 600 x12 = 288,000
288,000 - 10% = 259,200
444,600 + 259,200 = 703,800
According to USPAP, an appraiser may accept an assignment with prior value contingencies.
False
There is no such thing as a “best” down payment for an installment sale.
True:
It depends on the individual transaction
FREC has the power to impose a $10,000 fine for each separate offense violating Florida licensure law.
False:
It’s $5,000 maximum fine
Broker was unable to defend himself & has a final judgment that pays from the recovery fund against him. Unless the action was the result of an escrow disbursement order, the broker’s license status is involuntary inactive.
False:
Suspended indefinitely
An appraiser is unable to use the discount rate & must come up with the cap rate in the area on her own. It is not necessary to know the original cost of materials & depreciation or inflation or materials.
True
Broker is hired by land owner to sell property for $10,000. Landowner will pay broker $1,000 when sale is completed. Broker finds out that the land is worth $20,000 & has his friend purchase the land at the listed $10,000 price. Broker earns his commission & immediately lists the land for sale by his friend. They sell the land for $20,000 & split the profits. The broker’s license may be revoked or suspended for not to exceed 10 years.
True
Brokers must make ALL deposit records available for the DBPR to review.
True
If FREC issues a citation against licensee, licensee must pay within 30 days of imposition.
True
A new development has a development loan of $1,900,000 on it. Broker secures binder money for someone to make a cash purchase of $90,000 for a part of the property. This is acceptable as long as $90,000 or less will release the property from the development loan.
True
Quiet enjoyment is an example of an encumbrance.
False
A note subjects a property to a lien.
False:
A mortgage creates a lien
A salaried employee who works at an in-house rental office is NOT required to hold a real estate license.
True
If the FED raises the reserve requirement, it limits the amount of money to make loans & as a result interest rates rise.
True
If the FED raises the discount rate, it increases the amount of money to make loans & as a result interest rates drop.
False
The FED manages the cost & availability of money & credit by regulating the stock market.
False:
FED creates monetary policy
The risk associated with changes in the economy, interest rates, & market conditions is classified as dynamic risk.
True
Static risk is insurable.
True
A study designed to assess the likelihood that hazardous substances may be present on a particular site is referred to as an environmental impact study.
False:
Environmental site assessment
When preparing a CMA for a 20 year-old property with 1,350 square feet, it would be appropriate for a licensee to use as a comparable property one that is 22 years old, with 1,400 square located 4 blocks distant.
True
Overall capitalization rates are estimated by comparing capitalization rates of competing comparable investment properties.
True
The document submitted by a developer to the local planning agency to create a new subdivision is a governmental survey.
False:
Subdivision plat
Real estate offices with 15 or fewer sales associates are exempt from Americans with Disabilities Act (ADA) compliance.
False:
All real estate offices must be ADA compliant
Money set aside as reserves for replacement show up as an operating expense but are NOT deductible for income taxation purposes.
True
James has a low credit score & the lender refuses to issue a loan. The lender is concerned about regulatory risk.
False:
Financial risk
Investor is analyzing potential returns on an income-producing property by measuring best case, worst case, & most likely case scenarios. Investor is performing a sensitivity analysis.
True
Cash flow & income tax savings are considered to be benefits of owning investment real estate. The need for management is a potential downside of owning investment real estate.
True
The ability to convert an asset to cash quickly is known as disintermediation.
False:
Liquidity
The process of individual investors placing funds in a financial institution is intermediation.
True
Licenses, trademarks, copyrights, patents, franchises, customer lists, stocks, bonds, & goodwill are all classified as intangible assets
True
Broker has decided to utilize cash basis accounting. Income will be recognized when the sale is made & expenses will be recognized when incurred.
False:
This is the accrual method
GAAP stands for Generally accepted Accounting Principles.
True
Most brokers choose cash basis accounting.
True
Broker is completing an analysis of a manufacturing business. Owner says the business uses FIFO (Frist in First out) method of inventory costing. This means that cost is recorded as if the newest inventory is sold first.
False:
This describes LIFO (Last in First out)
In the FIFO method of inventory costing, cost is recorded as if the oldest inventory is sold first.
True
[Current assets - inventories] / current liabilities = current ratio
False:
This describes quick ratio
Current inventory is NOT taken into account when computing the quick ratio of a business.
True
Parties have entered into a contract that did not specify consideration but was signed, delivered, & accepted. This is referred to as a contract under seal.
True
The Clean Water Act permitting process is administered by the DBPR.
False:
Army Corps Of Engineers
The federal water pollution control act (clean water act) requires authorization to deposit dredged or fill matter onto wetlands.
True
Florida has identified coastal zone boundaries, defined permissible uses, & established regulatory controls in compliance with the coastal zone management act.
True
According to CERCLA, the current owner is responsible for clean-up even if the previous owner who sold it failed to disclose the property’s contaminated status.
False:
Innocent landowner was unaware of the property’s contaminated status
According to the comprehensive environmental response, compensation, & liability act, potentially responsible persons include the present owners & operators of a contaminated site; persons who owned or operated a site at the time hazardous substances were located at the site; generators of hazardous substances found at a site; & persons who arranged to transport hazardous substances to a site.
True
The minimum amount of capital required to open a new brokerage firm is calculated by adding start-up costs to 6 months of projected operating expenses.
True
Real estate brokerage expenses that do not fluctuate proportionately to changes in income are defined as variable expenses.
False:
Fixed expenses
Office rent, salaries, & insurance premiums are examples of fixed expenses.
True
Expenses that vary based on business activity are classified as fixed expenses.
False:
Variable expenses
Advertising, sales, commissions, & office supplies are examples of variable expenses.
True
Broker is investigating purchasing a real estate brokerage franchise. One of the major benefits of owning a franchise is its lower overhead & operating costs.
False
Major benefits of participation in a broker franchise network include formal training & a built-in referral network.
True
Brokerage start-up fees are lower for independent brokers than franchised brokers.
True
The accrual method of accounting is also called informal reporting because it operates like a checkbook.
False:
This describes the cash method
A new real estate broker files IRS Form SS-4 to obtain a new Social Security Number.
False:
A new employer identification number (EIN)
A new broker must apply for an account number with the Florida Department of Labor & Employment Security.
True
A person is considered an independent contractor if the person is reimbursed for expenses & receives a salary or hourly rate.
False:
This describes an employee
Employers must withhold amounts from employee wages to pay Federal Income Tax; Social tax: 6.2% up to the annual maximum (12.4% paid including employer’s share); Medicare tax on all wages: 1.45% (2.9% paid including employer’s share).
True
To determine the amount of income tax the employer must withhold, the employee must file a form 1099-misc.
False:
W-4
Broker requires new license to attend weekly meetings, keep scheduled floor duty, & hold at least 3 open houses each month. An IRS audit may find that new licensee is an employee.
True
Brokers who have employees must send quarterly deposits, along with Form 941, no later than the last day of each quarter.
False:
Deposits must be sent by the end of each month following the end of the quarter
Broker must deliver Form 1099-Misc. to independent contractors by January 31 to report commission payments.
True
The Federal Unemployment tax act (FUTA) requires employers to buy insurance to compensate employees for death or job-related injuries that occur in the course & scope of employment.
False:
This describes Workers’ Compensation Law
Workers’ Compensation law provides coverage for job-related injuries.
True
Employers MUST pay the entire Workers’ Compensation premium.
True
The Federal Unemployment Tax Act (FUTA) requires each employing unit to pay an unemployment tax of 6.2% of the first $7,000 earned per employee.
True
Employees must NOT pay any of the FUTA tax or Workers’ Compensation premium.
True
Broker should consider hiring a sales manager if the brokerage has more than 10 sales associates.
True
The primary responsibility of a sales manager is to manage the broker’s escrow account.
False:
The escrow account is the broker’s responsibility
The transaction coordinator’s job is to recruit, train, & assist the sales associates.
False:
These are sales manager’s responsibility
Honesty, empathy, self-motivation, & high self-esteem are all characteristics of a good sales associate.
True
Arrogance & ego-drive are characteristics of most successful sales associates.
False
The fair labor standards act & equal employment opportunity law standards prohibit hiring discrimination based on race, religion, color, sex, national origin, familial status, handicap status, age, & marital status.
True
Americans with Disabilities Act (ADA) prohibits companies with 15 or more employees, excluding independent contractors, from discriminating against qualified physically or mentally handicapped individuals who could perform essential job functions with reasonable accommodation.
True
A broker MAY NOT require an independent contractor to sign an employment agreement.
False
An independent contractor employment agreement must specify that the sales associate is an independent contractor for federal tax purposes & will be responsible for paying all taxes.
True
In order to be valid, an independent contractor employment agreement MUST include mandatory working hours & vacation schedules.
False
An independent contractor employment agreement should include signature acknowledging receipt & understanding of the policies & procedures outlined in the policies & procedures manual.
True
An independent contractor employment agreement should specify expenses that will be charged to the sales associate, either in the form of a commission reduction or through an invoice, including required rental fees & E&O insurance.
True
The policy & procedures manual is the document that, in addition to other information, states company policies related to discrimination, sexual harassment, & resolution of controversies.
True
The DBPR determines the broker responsible for a licensee’s activity based on the broker’s records.
False:
Based on registration in the department records
Broker feels that communications within the company need improvement. Broker should suggest that the sales manager conduct weekly sales meetings at a regular time & place to improve communication.
True
Broker Black is a regular customer of Insurance Agent Smith. Broker Black refers property purchasers to Smith for purchasing homeowner’s insurance. For every homeowner’s insurance policy purchased through Smith, Black gets an additional discount on his auto insurance. This is legal & no disclosure is required.
False:
Disclosure is required
Broker Black is a regular customer of Insurance Agent Smith. Broker Black refers property purchasers to Smith for purchasing homeowner’s insurance. For every homeowner’s insurance policy purchased through Smith, Black gets an additional discount on his auto insurance. This is legal as long as Black fully advises the affected parties.
True
Under RESPA, the applicant must be provided with the Annual Percentage Rate (APR) on or 3 days after loan application.
False:
APR Disclosure is required under the Truth-in-Lending Act
RESPA requires that the creditor deliver the “Special Information” booklet no later than 3 business days after receiving a complete loan application.
True
Cash on Cash return is sometimes also called equity dividend rate.
True
January 31st is an important date because a broker must give each employee a W-2 from and each independent contractor a 1099-Misc. form, & must file the annual federal unemployment tax return.
True
A broker would expect arbitration & mediation fees to be start-up costs.
False
Brokerage start-up costs include realtor fees, equipment, & promotional advertising.
True
