property ownership #5 Flashcards
Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?
The original sales agreement and any addenda
Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance?
Her down payment of $50,000 isn’t at least 20% of the purchase price.
Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe?
Prepayment
Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What’s his first step?
Obtain a pre-qualification letter.
Traditionally, lenders’ qualifying mortgage rules use a range of percentages to qualify for both the housing debt-to-income ratio and the total debt-to-income ratio. What are those ratio ranges?
25% to 28% for housing; 33% to 36% for total debt
When the lender gathers all kinds of information about the borrower’s assets, debts, income, employment history, and pulls their credit report, the buyer is ___________________.
Making an application for a loan
Manuel is selling his home to Selena. He has an existing loan that he’ll continue to make payments on, and he’s extending credit to Selena for the balance of the purchase price. She will make monthly payments to him. What type of financing are the parties using in this transaction?
Wrap-around loan
Which practice involves talking the consumer into refinancing over and over so a lender can charge fees?
Loan flipping
In the eyes of a lender, when financing a residence, what advantage does an investor have over owner-occupied borrowers?
Investors can use rental income to qualify.
Lawrence is a buyer closing on a home for which he’s obtaining financing. Which document will give Lawrence an estimate of the costs he’ll likely pay at closing?
Loan Estimate
Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?
A trustee will hold the title until the loan is paid.
When considering loan risk, which two items will lenders consider in equal measure?
Borrower and property
Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings and improving their agricultural property. He’s able to do this in part because of the ______ offered by the USDA Farm Service Agency.
Guaranteed loans
An inflated appraisal
occurs when an appraiser intentionally submits a misleading report to a lender that indicates an inflated property value. Inflated appraisals are illegal and can get both of these guys in trouble.
Mike’s been friends with Tim since college. They often work together: Mike flips houses and Tim’s an appraiser that he uses frequently. It works out great for both friends and Mike definitely gets a better appraised value on the flips Tim handles. For every appraisal Tim handles for him, Mike gives him a $100 gift card. In what illegal practice does it sound like they’re engaging?
Falsely inflating appraisals
Which entity services rural development loans?
FSA
The Farm Service Agency, an agency of the USDA, administers this program.
Tanner, a property owner, wants Gina, a real estate licensee, to manage the property he owns while he’s living out of state for a few years. In return, Tanner will pay Gina a flat monthly fee. What type of agreement must be in place between Tanner and Gina?
property management agreement
is a short-term loan used to bridge the gap between buying a home and selling your previous one. Sometimes you want to buy before you sell, meaning you don’t have the profit from the sale to apply to your new home’s down payment.
a bridge loan
addendum
modifies an original lease or purchase agreement. Items in the addendum could reflect a change in the agreed-upon price, what is included in the transfer of property, what improvements must be made before the home is paid for, or any other agreed-upon requests or responsibilities
is an employment contract between a property owner and a real estate broker. It allows the broker to act as a listing agent and find a buyer for the property on the seller’s terms.
a listing agreement
is a legal, binding contract outlining the terms under which one party agrees to rent property owned by another party. The lease guarantees the tenant (also known as the lessee) use of the property and guarantees the lessor—the property owner or landlord—regular payments for a specified period in exchange
a lease aggreement
is a contract of…., usually written, between the owner of a property and a renter who desires to have temporary possession of the property; it is distinguished from a lease, which is more typically for a fixed term.
rental agreement
Who are the parties to a property management agreement?
The property manager and property owner
means that a licensee or brokerage firm uses trust funds for personal or operating purposes
Conversion
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?
Prior appropriation
he doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely live in the western part of the U.S. where many states subscribe to this doctrine.
What’s the best definition of land?
The earth’s surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects
Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?
lots and block
Which of these is the best definition of real estate?
Land, plus all things permanently attached to it naturally or artificially
Clay is interested in purchasing a condo about a mile from the city center. He went to the city records office to review everything that was filed by the condo developer. In the condominium declaration, he saw how ownership of the common areas is shared among the ______.
Unit owners
What forms the boundaries of a township?
Township lines and range lines
A lot measuring 108,900 square feet is for sale. How many acres is this?
Two-and-a-half
Sheila owns a timeshare that gives her ownership of the property for a certain number of weeks per year in perpetuity. What type of timeshare is this?
his is a timeshare estate, which conveys ownership, not simply the right to use a property.
What’s the best definition of real property?
Real estate, plus all of the interests, benefits, and rights included in ownership
A professional, on-site measurement of the lot lines and dimensions of a property is known as ______.
a survey
Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan’s property. Stan filed a civil legal action against Emile. Which of these would the court use to determine the actual lot line?
Legal descriptions of both properties
Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?
Reconciliation
What’s the role of the mortgage contingency in a sales contract?
Documents the type of and timeline for financing, and outlines what to do if financing falls through.
Which of these statements about the homeowner’s right of redemption is true?
Rights of redemption window with REOs may have expired.
Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?
Busy street
Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don’t have the best credit score. They’ve decided to buy the home using an FHA loan. Which of these is a true statement?
A minimum down payment of 3.5% is required
What does a balloon payment represent at the end of a loan term?
It means that some principal remains at the end of the loan term.
In which of these situations would the property most likely be conveyed with a trustee’s deed?
In which of these situations would the property most likely be conveyed with a trustee’s deed?
Which of these is NOT an example of price fixing?
Jake’s firm agrees to charge all clients a listing commission of between 2% and 2.5%.
Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn’t, what problem might this create?
Basement leaks
Which one of the following scenarios describes an adverse condition that would need to be disclosed?
A hail storm damaged some shingles last year.
ou know a property’s effective gross income and its operating expenses. How would you calculate the net operating income?
Subtract operating expenses from effective gross income
Which statement regarding fee simple defeasible estates is true?
The estate includes the full bundle of legal rights, but ownership is based on a condition.
Which of the following statements regarding reasonable accommodations and modifications is true?
An individual can make a request for accommodation or modification at any time.
A fire destroyed Meredith’s house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn’t fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?
The amount it would cost to completely replace her home
Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?
pending
When market conditions indicate top-of-the-market pricing, is it always in your client’s best interest to price it there?
No, it still has to appraise.
Kenneth, an appraiser, is driving around the area where the subject property is located. Which step in the appraisal process does this represent?
Gather and analyze data.
What’s the capitalization formula used in the income approach?
Value = net operating income divided by cap rate
Identifying the purpose of the appraisal leads the appraiser to do what next?
Identify data needed.
An attorney receives a request to have an appraisal performed on a property inheritance that she is transferring from her deceased client’s estate to his heir. Which of these statements is true?
This isn’t a federally related transaction and under federal law an appraisal isn’t required.
When market conditions indicate top-of-the-market pricing, is it always in your client’s best interest to price it there?
No, it still has to appraise.
Gladys and her husband, Ralph, owned their home as joint tenants. After Ralph died, Gladys owned the home in severalty. When she dies, which of these will happen to her home?
Her heirs, as described in her will or according to state law, will receive the property.
Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn’t take possession of or title to the property. What likely happened?
The previous owners redeemed the property by paying all mortgage payments and fees
Why might a licensee want a buyer to sign a buyer representation agreement?
it helps ensure buyer loyalty
Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure?
The Closing Disclosure isn’t required for a HELOC.
Corinne, an escrow agent, is preparing for the Thomas/Trenton closing in four days. Which of these documents will Corinne prepare?
Working with the lender, she’ll prepare the settlement statement, which details the costs the buyer and seller will have at closing.
A rectangular lot is 450 feet long and 250 feet wide. How do you calculate the square footage?
Multiply the length by the width.
Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it’s going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in?
A lien theory state
What is the term for sites identified by the EPA under the Comprehensive Environmental Response, Compensation, and Liability Act?
Superfund site
What is the most common way that asbestos enters the body?
When asbestos fibers decay or are disturbed, the friable particles can be inhaled.
Marvin knows that three-bedroom properties with two bathrooms sell quickest in his market. In an ad for a new listing, he wrote, “Bonus room could easily be a third bedroom”, even though he knows from experience that this isn’t true because the room is too small, has no egress and no heat source, and can only be accessed by walking through a bathroom. Is Marvin guilty of misrepresentation?
Yes, because he knew there would be major issues converting that room to a bedroom.
Blake is allowed to use his property in a way that’s prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?
Use variance
Rex needs to handle some money he acquired during an “unsavory” business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business deal. What kind of contract do Rex and Ben have?
a void contract
if its for illegal use if void
Which statement correctly identifies a federal fair housing law and what it addresses?
Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.
Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?
Alda tells Marge that she’s hired an inspector to perform a property inspection.
Your buyer clients have access to property tax information for each listing that you’ve given them. Why are they asking you about county tax assessment schedules?
The property taxes may change drastically after reassessment.
Why is a foreclosure more likely to have title issues than a non-foreclosure?
Borrowers who are in foreclosure are permitted to acquire unrecorded liens.
A poor floor plan is an example of which type of depreciation?
Incurable depreciation
Roberto, a licensee, filled in the blanks on a standard form used in his brokerage firm. Is this okay?
Yes, licensees can use standard forms provided by the brokerage or approved by an attorney.
Jennings has received a Closing Disclosure from his lender. What’s the purpose of this form?
To detail all costs Jennings will owe at closing
Which of the following is a common element of a buyer representation agreement
Description of the property being sought
Which of the following is a planning and zoning issue that most prospective buyers might need to know?
The zoning designation for the given property
Which of the following statements about the fiduciary duty of confidentiality is true?
It doesn’t extend to material facts relating to the property.
Select the statement that accurately depicts property ownership income tax implications.
During the ownership stage, both investors and homeowners may be able to deduct mortgage interest paid.
Select the statement that correctly exemplifies the covenant term.
The covenant of quiet enjoyment promises that the grantee won’t be disturbed by a title defect the grantor passes on.
Lily is considering signing a buyer representation agreement with you, but she’s unconvinced. “What’s in it for me?” she asks. What’s one major benefit to her when she signs the buyer representation agreement?
It means you’re representing her and not the seller.
In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what?
braketing
While hosting an open house, Liza speaks with prospective buyers. They’re interested in the house, but think the listing price is a little high. They ask her what other incentives they could include in their offer to get the seller to come down on their price. If Liza helps them, what duty may she be breaching?
loyalty
An easement dictates that property owner A gives the right to property owner B to use a portion of the property. Which term describes property A?
Servient estate
John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted’s property several years earlier. Which general warranty deed covenant does this represent?
The covenant against encumbrances
Why is a foreclosure more likely to have title issues than a non-foreclosure
Borrowers who can’t afford loan payments may have taken out other loans against the propert
Which of these property managers is violating fair housing law?
Sandra, who represents the owner of a multi-building complex, will only show families with children units available in the building closest to the park.
Megan’s law
A registrations system to identify sex offender living in your area, who also have kidnapped a child or committed sexual crime.
Improvements
Artificial attachments to land that includes things such as fencing, buildings, and walkways
Real estate
Land, was all things permanently attached to naturally or artificially
Townhomes
The owner owns both the structure and the land
Time shares
Ownership of property allows purchaser to use for periods throughout the year
Metes
Are the directions and distance of a line forming the properties boundary
Bounds
Are physical features that define the boundaries of the property
Metes and bounds
Their characterized by a point of beginning come out which is where the discretion both begins and ends that it also uses monuments to Mark boundaries that the monuments are though to have more credibility than the measurements
There 5 steps to determine if and item is real or personal property. What does the acronym MARIA stand for
Method of annexation, adaptability for use, relationship of the parties, intention in place and, agreement of the parties
Land
It’s the Earth’s surface extending downward to the Center of the Earth and upward to infinity, including permanently attached naturally objects
Fixture
Anything permanently attached to the land or department structure of the land
If the pictures status is debatable, the country should clarify whether the item will stay or go that if a fixture should be excluded from the transfer, the cell’s contract should clearly identify that the item is excluded from the transaction
Annexation
Is the process of converting personal property to real property
Severance
Is the process of converting something that’s was real property into personal by removing it
An encumbrance may be ______ or ____
Monetary or physical
