Quick Quiz 4 Flashcards
A selling agent who is the exclusive agent for the buyer can do all of these things EXCEPT
A) act as the seller’s agent since the seller is the one paying the commission.
B) withhold negative information about the buyer.
C) personally submit the buyer’s offer to the seller.
D) submit his client’s offer to the seller and seller’s agent with the seller’s approval.
A) act as the seller’s agent since the seller is the one paying the commission.
An agent who is the “exclusive agent for the buyer” cannot also act as the seller’s agent. If the buyer’s agent also acts as the seller’s agent, there is a dual agency (if disclosed) or a divided agency (if not disclosed) and the agent cannot then be the “exclusive agent for the buyer.” The buyer’s agent can withhold negative information about his client, the buyer, as long as it is not a material fact that the seller might reasonably take into consideration in deciding to accept an offer.
Berg sells Mann a property, using a conditional sales contract. The contract is recorded and a deposit is made. Mann continues to live on the property but stops making payments and avoids Berg. He then abandons the property one night. In this situation
A) the sale has no effect on the title.
B) marketability of title is not affected.
C) there is a cloud on the title.
D) the new buyer would not be concerned with Mann.
C) there is a cloud on the title.
The recording of the contract or taking possession of the property gives constructive notice and therefore creates a cloud on the title under the circumstances outlined. Unless the vendee could be found and persuaded to deliver a valid quitclaim deed to the vendor, a successful quiet title court action would be necessary to make the title marketable. FYI, a conditional sales contract is also known as a land contract, contract of sale, and real property sales contract.
The principle of substitution applies to A) use. B) structural design. C) all of these. D) income.
C) all of these.
The principle of substitution states that when several similar commodities, goods, or services are available, the one with the lowest price attracts the greatest demand and widest distribution. The substitution of one property for another may be in terms of use, structural design, or earnings.
What is included in an FHA loan? A) Secondary financing B) Mortgage life insurance C) Schedule of payments D) Prepayment penalty
C) Schedule of payments
The borrower would need to know the schedule of payments for the loan. FHA loans do not have prepayment penalties. Secondary financing is not normally permitted at the origination of the first loan. Mortgage life insurance is not a requirement of an FHA-insured loan (although mutual mortgage insurance is a requirement to protect the lender against default of the borrower).
Which element is NOT necessary in the formation of a contract? A) Performance B) Offer C) Consideration D) Acceptance
A) Performance
Offer, acceptance, and consideration are essential in the creation of a contract. Performance is the desired result and not an essential in the formation of a contract.
An investment property is appraised at $400,000 based on a net income of $36,000 and a 9% capitalization rate. The value of the property based on a 12% capitalization rate would be A) $300,000. B) $250,000. C) $450,000. D) $423,000.
A) $300,000.
R × V = I
0.12 × V = $36,000
V = $36,000 ÷ 0.12 = $300,000
"Soil pipe" relates to A) irrigation pipes. B) hot water lines. C) gas lines. D) sewer pipes.
D) sewer pipes.
In November, a storm caused damage in Able’s house due to a leaky tile roof. In April, Able listed the house with Broker Baker. Broker Baker showed the house to Smith, but did not mention the leaky roof, although Able had mentioned it. After close of escrow, Smith sustained damage to the interior of the house due to this leaky roof. Under these circumstances, buyer Smith
A) had no recourse since escrow had closed.
B) could take legal action against Able, and if successful, Able could most likely recover the loss from Broker Baker.
C) could take legal action against Broker Baker but not against Able.
D) had no recourse under the doctrine of caveat emptor.
B) could take legal action against Able, and if successful, Able could most likely recover the loss from Broker Baker.
Since a principal is responsible for all acts of the agent, Able could be sued by Smith. Since Able informed broker Baker of the defect, however, he or she could recover any loss from the broker.
Which would NOT be covered by a CLTA policy but would be covered by an ALTA policy?
A) Mistakes in liens and documents of record
B) Capacity of the grantee of a deed of reconveyance
C) Discrepancies found in documents of record
D) Property lines accurately established by a survey
D) Property lines accurately established by a survey
With respect to easements appurtenant, which statement is correct?
A) If the grantor conveys title to property, the easement passes automatically with the land.
B) All encumbrances are liens but all liens are not encumbrances.
C) An easement always gives the rights of ingress and egress.
D) The dominant tenement is the land burdened and benefited by the easement.
A) If the grantor conveys title to property, the easement passes automatically with the land.
Easements pass automatically upon transfer of the dominant tenement. The first statement is incorrect, as the dominant tenement is benefited, not burdened, by the easement. The second statement is incorrect, as an easement can include, besides rights-of-way, the right of receiving air, light, or heat; the right of using a wall as a party wall; or the right of flooding land, among other things. The third statement is incorrect, as an easement is an encumbrance but not a lien.
Mr. and Mrs. Jenkins own a home worth $533,000 on which there is a $519,000 loan. Mrs. Jenkins alone filed a Declaration of Homestead. If there were a judgment lien filed against them
A) the exemption would be for $10,000 since Mrs. Jenkins filed it without her husband’s signature.
B) the homestead is invalid since only Mrs. Jenkins filed it.
C) the home would not be sold because there is insufficient equity over and above the exemption and the secured lien to satisfy the creditor.
D) the home could be sold to satisfy the judgment.
C) the home would not be sold because there is insufficient equity over and above the exemption and the secured lien to satisfy the creditor.
The property is held by the husband and wife. She may file a homestead exemption of $75,000. The property would not be sold because the $519,000 loan and the $75,000 exemption exceed the $533,000 market value of the property.
With regard to local building codes (for example in Los Angeles) versus the Federal Uniform Building Code, which would prevail?
A) Local building codes always take precedence over the Federal Uniform Building Code.
B) The Federal Uniform Building Code applies only to general codes while local codes are more specific.
C) Federal codes always take precedence.
D) Whichever has the higher standards of health and safety will prevail.
D) Whichever has the higher standards of health and safety will prevail.
Generally, conflicts of law are decided with the health, safety, and general welfare of the people as the highest standard.
Which approach to a value estimate tends to set the upper limit of value? A) Market comparison B) Replacement cost C) Income D) Comparative sales
B) Replacement cost
A buyer assumes an FHA mortgage with the lender's approval and pays the seller's equity in cash. The lender charges the buyer a $30 fee. This fee is known as A) a novation. B) an assumption fee. C) an origination fee. D) points.
B) an assumption fee.
An assumption fee is the lender’s charge for changing over and processing new records for a new owner who is assuming an existing loan.
The trustor under a trust deed is the party who A) receives the note. B) lends the money. C) signs the note as maker. D) holds the property in trust.
C) signs the note as maker.
The trustor is the one who receives the money or the extension of credit. The trustor signs the note as a promise to repay and gives the lender security by signing the trust deed conveying the legal title to the trustee.
