Quick Quiz 3 Flashcards
Franklin offered to perform all of the obligations in a purchase contract. This act is considered a A) tender. B) covenant. C) demand. D) condition.
A) tender.
Tender is the act by which one offers to perform under a contract. It is not the actual performance.
What is NOT a result of a subordination clause?
A) Permits a first trust deed to be refinanced and extended without losing priority
B) Causes hardship on the buyer by placing the lender of a larger sum in the favored position
C) More of a risk to seller and may cause increased cost of the land and more stringent release clause
D) Allows for a construction loan to take priority
B) Causes hardship on the buyer by placing the lender of a larger sum in the favored position
The other three choices are all conditions that may result from a subordination clause. Causes hardship on the buyer by placing the lender of a larger sum in the favored position is incorrect because it does not create a hardship for the buyer but would assist the buyer in obtaining a construction loan.
As the first line of defense in lending money on a residential property, a lender would look to
A) income of the borrower.
B) loan-to-value ratio.
C) installment payments of the amortized loan.
D) property value.
D) property value.
The security for a mortgage loan is the value of the property. The lender will give consideration to many things, including the income of the borrower, in making a loan commitment decision. However, once the loan is made, in the event of default by the borrower, only the property value provides security for the loan.
When a railroad needs specific land and the owner objects, the railroad may exercise the right of A) eminent domain. B) caveat emptor. C) injunction. D) writ of replevin.
A) eminent domain.
Public utility companies and similar public and semipublic bodies may exercise the power of eminent domain.
A real estate broker is most likely to receive a commission from both parties when involved in which transaction? A) The negotiation of a loan B) The selling of a business opportunity C) A tax-free exchange D) A short-term lease
C) A tax-free exchange
In an exchange, the broker is usually working for both parties and is most likely to receive a commission from both, if the broker gives them knowledge of the dual agency and gets their consent.
A minority prospect came to you and requested to see a specific house in a minority neighborhood. You can lawfully assume the prospect is
A) unable to qualify for VA or FHA housing and you should refuse to show prospect any houses.
B) trying to test you.
C) interested in a house with a particular type of architectural style.
D) interested in a house in a minority neighborhood.
C) interested in a house with a particular type of architectural style.
Questions that deal with discrimination should be answered with a color-blind attitude and without bias. Any choice that hints at discrimination is probably the wrong choice. It is incorrect that you can lawfully assume the prospect is interested in a house in a minority neighborhood because although the house the minority prospect wants is in that neighborhood, it does not mean he wants the house because of its proximity to other minorities. Although it may be overreaching to assume the prospect desires a particular type of architectural style, it is not discriminatory.
Mr. Ferguson purchased a property for $125,000 with 12% cash down. He financed the balance with equal monthly payments of $1,048, which included 11% interest, and the loan would be fully amortized in 30 years. Mr. Ferguson sold the property for $139,750 before making any payments on the loan. What was his equity at the time of sale? A) $29,750 B) $15,000 C) $24,750 D) None of these
A) $29,750
Purchase Price $125,000 (Equity at purchase)
Less Down Payment – 15,000 (0.12 cash down × $125,000)
Loan $110,000
Selling Price $139,750
Less Loan –110,000
Equity $29,750 (At time of sale)
Which statement is NOT true with respect to depreciation as determined by an appraiser?
A) It is inherent in the property and not created by outside influences.
B) It can be determined by more than one method of appraisal.
C) It is loss of value from any cause.
D) It can be computed for both past and future.
A) It is inherent in the property and not created by outside influences.
Depreciation can be from either inherent or extraneous causes. Economic/social obsolescence is an outside factor that can have a great impact on value. Examples include an increase in interest rates, and increase in crime in the neighborhood, zoning, and rent control.
In administering the Subdivision Map Act, a local planning commission would be responsible for ensuring
A) that new industries will move into the area.
B) proper financing for required construction of offsite improvements.
C) adequacy of sewers, street design, and drainage.
D) all of these.
C) adequacy of sewers, street design, and drainage.
The Subdivision Map Act is concerned with the physical aspects of the subdivision. It is controlled by local government.
The fluctuations (activities) of the money market are extremely important to the real estate business. When interest rates go up and the income of a property is fixed, capitalized value of the property will A) tend to stabilize. B) decrease. C) be unaffected in the short term. D) increase.
B) decrease.
When interest rates increase, it indicates that investors are asking for a higher rate of return of their investments. This results in higher capitalization rates. If the cap rate increases and the income stays the same, the value of the property decreases.
What is the minimum amount of time that a broker must keep signed copies of listings, deposit receipts, et cetera?
Three years
With what type of estate is the phrase "of indefinite duration" most usually associated? A) Less-than-freehold estate B) Estate of inheritance C) Estate for years D) Estate from period-to-period
B) Estate of inheritance
The chief characteristic of a fee simple estate, also known as an estate of inheritance, is that it is of indefinite duration. The other choices are estates with limited duration.
A clause in a second trust deed that permits the first trust deed to be refinanced without affecting its priority would be known as A) none of these. B) an alienation clause. C) an acceleration clause. D) a submortgage.
A subordination clause is a clause that allows for such a change in lien priority.
Eminent domain and police power are governmental rights established by law. Which action would NOT be considered police power? A) Zoning laws B) Building regulations C) Subdivision development regulations D) Condemnation
C) Subdivision development regulations
The use of the power of eminent domain is often referred to as condemnation. Building regulations, zoning laws, and subdivision development regulations are all examples of police power.
An offer to buy becomes a binding purchase contract
A) when the offer is accepted and the acceptance is communicated to the offeree.
B) at any of these times.
C) when the offer is accepted and the acceptance is communicated to the offeror.
D) the instant the offer is accepted.
A) when the offer is accepted and the acceptance is communicated to the offeree.
To become a binding purchase contract, an offer must be accepted and the acceptance communicated to the offeror.
"A charge imposed upon real property as security for a specific act" is a definition of A) restrictive covenant. B) encumbrance. C) lien. D) easement.
C) lien.
A lien can be defined as a charge imposed upon specific property by which it is made security for the performance of an act, typically the payment of a debt.
Real property taxes for the 2005-2006 fiscal year become a lien on A) February 10, 2006. B) January 1, 2005. C) December 10, 2005. D) November 1, 2005.
B) January 1, 2005.
Taxes become a lien on January 1, 2005 preceding the fiscal tax year.
A listing agent gave part of his commission to the buyer. He
A) is guilty of criminal action.
B) may be disciplined by the real estate commissioner.
C) is guilty of committing a civilly wrong act.
D) must disclose this to the seller.
D) must disclose this to the seller.
That an agent “gave part of his commission to the buyer” would be considered a material fact. The fiduciary relationship of the agent to the principal required full disclosure of all material facts. The agent would not be disciplined by the real estate commissioner unless the broker failed to disclose this material fact to the principal.
