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Real Estate > Real Estate Test 3 > Flashcards

Real Estate Test 3 Flashcards

1
Q

Freehold estates include all the following EXCEPT a

A. Fee simple estate
B. Qualified fee estate
C. Leasehold estate
D. Life estate

A

C. Leasehold estate

A freehold estate is ownership. A lease is the right to occupy, but not ownership

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2
Q

Joy, David, and Michael on a property is tenants in common. David sells his share of ownership to John. John is now a(n)

A. Joint tenant with Joy and Michael
B. Tenant in common with Joy and Michael
C. Owner in severalty
D. Qualified fee owner

A

B. Tenant in common with Joy and Michael

Included with ownership as tenants in common is the right to partition one’s interest in the land

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3
Q

The action taken by the state take property when a property owner dies without heirs and without a will is called

A. Eminent domain
B. Escheat
C. Foreclosure
D. Adverse possession

A

B. Escheat

If an owner dies intestate and has no living heirs, ownership of the land will revert to the state

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4
Q

The tax due on profits realized on the sale of investment property, held by the owner for six years and six months, is called

A. Short term capital gains
B. Long-term capital gains
C. Profit margin tax
D. Property appreciation tax

A

B. Long-term capital gains

The tax due on the sale of the property is capital gains tax

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5
Q

The type of insurance that protects a landlord from liability damages due to criminal or negligent acts of an employee during working hours is

A. Homeowners insurance
B. A surety bond
C. FEMA Insurance
D. All purpose insurance

A

B. A surety bond

A surety bond is an agreement by an insurance company to be responsible for defaults incurred by an insured party

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6
Q

A naturally occurring gas that can present itself as an environmental hazard is

A. PCBs
B. Carbon monoxide
C. Radon
D. Friable asbestos

A

C. Radon

Radon is a natural gas that may cause lung cancer.

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7
Q

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) provides

A. Pure drinking water
B. Landowner liability for cleanup of environmental contamination
C. Government funding to subsidize containment cleanup costs
D. Radon emissions controls

A

B. Landowner liability for cleanup of environmental contamination

CERCLA Is administered by the EPA. The law provides a process to identify and hold liable persons responsible for creating hazardous waste

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8
Q

A tenant who qualifies for section 8 housing and earns $12,000 per year will have to pay maximum monthly rent of

A. $300
B. $400
C. $500
D. $600

A

A. $300

Section 8 housing is a federal housing allowance that provides rent subsidies for low income households

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9
Q

The city agency responsible for determination of land use is the

A. Department of buildings
B. Department of finance
C. City planning commission
D. Landmarks preservation commission

A

C. City planning commission

The city planning commission will determine land-use through zoning, permits and variances.

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10
Q

In Trenton, the agency responsible for an acting local law is

A. The board of trustees
B. The city planning commission
C. OPRHP
D. City Council

A

D. The city Council

The city Council will vote on laws affecting the local municipality.

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11
Q

When a newly constructed building is complete and passes inspection from a building department inspector, the city will issue a

A. Certificate of occupancy
B. Certificate of completion
C. Certificate of compliance
D. Certificate of certiorari

A

A. Certificate of occupancy

The certificate of occupancy will allow occupancy of a completed building that has complied with all building codes

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12
Q

An ad valorem tax is based on

A. Value of city improvements to a neighborhood
B. Assessed property value
C. Average home values in a neighborhood
D. Use of an equalization factor

A

B. Assessed property value

Ad valorem Means according to value

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13
Q

Real estate taxes are based on

A. Tax shares owned by the property owner
B. Homestead rates
C. Budget requirements
D. Certiorari rates

A

C. Budget requirements

The local municipality would decide the budget needed to support local government activities.

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14
Q

A first time home buyer may not be liable for a 10% early withdrawal tenets if he or she uses IRA funds to buy a home. This exemption allows the buyer to use IRA funds up to

A. $5000
B. $10,000
C. $15,000
D. $20,000

A

B. $10,000

The maximum is $10,000

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15
Q

The income a real estate sales person earns from commissions paid on closed transactions is considered to be

A. Passive income
B. Portfolio income
C. Capital gains income
D. Active income

A

D. Active income

The sales person is currently working to receive the income

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16
Q

Which statement is always TRUE

A. all encumbrances are liens
B. all liens are encumbrances
C. All liens are encroachments
D. All easements are liens

A

B. All liens are encumbrances

All liens are encumbrances, but not all encumbrances are liens

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17
Q

In Rhode Island, the transfer tax on real property styles is

A. $.55 per $500 of the sale price
B. $2.00 per $500 of the sales price
C. $2.55 per $500 of the sale price
D. $5.00 per $500 of the sales price

A

B. $2.00 per $500 of the sales price

The Rhode Island transfer tax is $2.00 per $500 of the sales price

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18
Q

An abstract of title is a document that

A. Is used to transfer the title to real property
B. Offers a summary of the history of the recorded title
C. Guarantees that the grantor has marketable title
D. Inures the title against third-party claims

A

B. Offers a summary of the history of the recorded title

An abstract is a summary report and history of all conveniences and encumbrances affecting title to real property

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19
Q

A closing takes place on October 18. The annual property tax is a $4500 and are paid at the end of each year. On the closing statement, the buyer will be credited and the seller will be debited

A. $900
B. $3587.50
C. $3812
D. $1125

A

B. $3587.50

291 days x $12.33 per day = $3587.50

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20
Q

Colleges, hospitals, and houses of worship are examples of

A. Commercial real estate
B. Special purpose property
C. Residential property
D. Mixed use property

A

B. Special purpose property

These properties are used for a specific use

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21
Q

Neighbors are allowed to express their concerns in public hearings when a developer applies for a

A. Variance
B. Conditional use permit
C. Nonconforming use permit
D. Tax exemption

A

A. Variance

A variance will permit an exception from the current zoning ordinances

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22
Q

Regulations that govern permissible use of property are called

A. Building codes
B. Environmental codes
C. Planning codes
D. Zoning codes

A

D. Zoning codes

Zoning is police power. A zoning ordinance will regulate land uses.

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23
Q

A property owner wants to construct a building on designated wetlands. Before construction can start, permits and approvals must be obtained from

A. Rhode Island state
B. The environmental protection agency
C. The Army Corps of Engineers
D. All of the above



A

D. All of the above

All we need to give consent for building on wetlands

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24
Q

An appraisal of real property offers

A. An opinion of value
B. The market value of a property
C. The assessed value of property
D. The sales price of the property

A

A. An opinion of value

An appraisal is an educated opinion of value

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25
Q

A real estate broker who is not a licensed appraiser can offer an opinion of property value. That is called a

A. Sales value estimate
B. Market comparison value
C. Comparative market analysis
D. Replacement value estimate

A

C. Comparative market analysis

A comparative market analysis is a comparison of prices of recently sold properties that are similar to the subject property

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26
Q

A licensed appraiser uses three approaches to value in appraising a property, but each approach yields a different value for the same parcel. To determine the final appraised value, the final step in the appraisal process is

A. Omitting the highest value in averaging the two remaining values
B. Omitting the lowest value and averaging the two remaining values
C. Reconciliation of the values by giving the most weight to the most appropriate approach to value
D. Taking an average of all three values

A

C. Reconciliation of the values by giving the most weight to the most appropriate approach to value

The appraiser will use a weighted average for the most applicable approach to value

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27
Q

When appraising a school building for insurance purposes, the best approach in obtaining an appraised value of the property is the

A. Cost approach
B. Income approach
C. Market comparison approach
D. Comparative market analysis approach

A

A. Cost approach

The cost approach is used for special use properties

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28
Q

The Providence executive law covers discrimination against race, creed, color, national origin, sexual orientation, and

A. Marital status
B. Religion
C. Steering
D. Middle-class families with children

A

A. Marital status

The executive law covers discrimination against race, Creed, color, national origin, sexual orientation, and marital status

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29
Q

A homeowner takes out a new fire insurance policy on that home. Fire insurance is a type of

A. Static risk
B. Dynamic risk
C. Limited liability risk
D. Comprehensive risk

A

A. Static risk

Fire and hazard insurance cover all their hazards such as hail, smoke damage, Winstone etc.

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30
Q

A commercial building is fireproof, has a sprinkler system, a close circuit security surveillance system, and a security fence around the building. The building would be categorized as a(n)

A. Dynamic risk
B. Static risk
C. HPR property
D. Multi-peril risk

A

C. HPR property

Highly protected risk property

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31
Q

A homeowners insurance policy may not be issued if the

A. House has no alarm system
B. Property is in an area with a high incidence of burglaries
C. Property is outside a flood zone
D. House is not owner – occupied

A

D. House is not owner – occupied

If a loan is secured by a property, the lender will require the owner to carry homeowners insurance

32
Q

The value of a property used to determine property taxes is the

A. Assessed value
B. Replacement value
C. Market value
D. Appraised value

A

A. Assessed value

The assessed value is the value set on property for taxation purposes

33
Q

The buyer of a foreclosed property at auction will become the owner of the property

A. Subject to satisfaction of all other liens
B. After giving the occupant sufficient time to vacate
C. With guarantee of have bit ability
D. As soon as the new deed is delivered to and accepted by the buyer

A

D. As soon as the new deed is delivered to and accepted by the buyer

To have a complete transfer of ownership, the deed must be delivered and accepted

34
Q

Providence is allowed to divide property into four classes. A 50 – unit condominium building would be included in

A. Class I
B. Class I I
C. Class I I I
D. Class IV

A

B. Class I I

Class two is residential with four or more units

35
Q

Improvement value is determined by all of the following EXCEPT

A. Age of the improvement
B. Condition of the improvement
C. Cost of the improvement
D. Construction of the improvement

A

C. Cost of the improvement

Cost is not relevant to the current improvement value.

36
Q

A condominium building may be operated by a(n).

A. Board of managers
B. Board of directors
C. Advisory board
D. Board of supervisors

A

A. Board of managers

The homeowners association managers may operate the activities for the complex

37
Q

If a condominium owner wants to sell their unit, the condominium owners association may have the right to

A. An option to buy the unit
B. Veto the sale
C. First refusal to buy the unit
D. Determine the minimum acceptable sales price

A

C. First refusal to buy the unit

The owner would have to offer the HOA the unit at the same price before excepting an outside offer

38
Q

Before building may be converted into a condominium, what documents must be filed with the county clerks office

A. An offering plan and a plat map
B. A declaration and floor plans
C. An offering statement and a red herring
D. An application for zoning variance in blueprints of the building

A

B. A declaration and floor plans

The Declaration will include the legal description for the complex and individual units

39
Q

Rules that govern condominium homeowners associations are called

A. Covenants
B. Restrictions
C. Easements
D. Bylaws

A

D. My laws

The bylaws govern the association activities and powers

40
Q

An estimation of how much income an investment property will generate in the future appears on a(n)

A. Depreciation schedule
B. Operating schedule
C. Prediction schedule
D. Pro forma schedule

A

D. Pro forma schedule

A pro forma is an estimation of how much income in investment property will generate in the future

41
Q

That service refers to

A. Operating expenses
B. Real estate and income taxes
C. Principal and interest included in a mortgage payment
D. Vacancies and credit losses

A

C. Principal and interest included in a mortgage payment

The cost of borrowing money in the amount borrowed

42
Q

A recommended type of real estate investment for people who have little or no investment experience would be

A. A vacant land
B. A one, two, or three family house
C. A 20 – unit condominium building
D. Fixer – upper properties

A

B. A one, two, or three family house

The residential property is the least complicated of the listed investment properties

43
Q

Rate of return is directly related to

A. Risk
B. Amount of money invested
C. The time it takes for an investment to break even
D. Terms of financing

A

A. Risk

The amount of risk will affect the rate of return. Real estate can be a high risk investment

44
Q

When calculating NOI, what item is NOT included

A. Management fees
B. Real estate taxes
C. Utility bills
D. Mortgage payments

A

D. Mortgage payments

Mortgage payments are debt service and not an expense

45
Q

The uniform commercial code (UCC) is

A. Required for commercial property investors
B. Commercial law adopted by every state
C. Commercial law for international trade
D. Federal regulations of commercial property developers

A

B. Commercial law adopted by every state

The UCC is the unification of commercial codes adopted by most states

46
Q

A type of investment property that produces little or no income and requires little or no maintenance is

A. Unimproved land
B. A warehouse with a tenant who is triple – net lease
C. A single – family residence
D. Hey cooperative a condominium unit with a tenant who has a month to month lease

A

A. Unimproved land

Land that is unimproved is a type of investment property that produces a little or no income in requires little or no maintenance

47
Q

The formula for calculating effective gross income is

A. PGI - OI +(V&C) = EGI
B. PGI + OI -(V&C) = EGI
C. PGI + OI + (V&C)= EGI
D. PGI - OI - (V&C) = EGI

A

B. PGI + OI - (V&C) = EGI

PGI + OI - (V&C) = EGI Is the formula for calculating effective gross income

48
Q

Variable expenses for investment property include all the following EXCEPT

A. Management fees
B. Payroll
C. Utilities
D. Real estate taxes

A

D. Real estate taxes

Real estate taxes are fixed

49
Q

An investor who wants to buy property, based on an 8% cap rate, finds a property that has an NOI of $126,500. How much should the investor be prepared to pay for this property

A. $1,581,250
B. $1,375,000
C. $1,012,000
D. $15,812,500

A

A. $1,581,250

$126,500 / 8% = $1,581,250

50
Q

Another term for transfer is

A. Alliance
B. Alienation
C. Avoidance
D. Attitude

A

B. Alienation

Alienation is another word for transfer

51
Q

A real estate broker whose office engages in restraints of trade is violating the

A. Civil rights act of 1868
B. Sherman anti-trust act
C. General obligations law
D. Law of agency

A

B. Sherman antitrust act

The individual would be violating the Sherman antitrust act

52
Q

When the parties to a transaction agree on the essential terms, what is said to have taken place

A. A procuring cause of sale
B. Ratification
C. Meeting of the minds
D. Self dealing

A

C. Meeting of the minds

A meeting of the minds when terms have been agreed to

53
Q

A roofing system that relies on sloping timbers supported by ridge board and made rigid by interconnecting Joyce as what kind of roof

A. Truss
B. Joist and rafter
C. Exposed rafter
D. Gable

A

B. Joist and rafter

This would be an example of Joist and rafter

54
Q

Jim’s neighbor, Ed, regularly uses Jim’s driveway to reach his garage. Ed has an easement over Jim’s driveway. Jim’s property is called

A. The dominant estate
B. An estate
C. A leasehold
D. The servient estate

A

D. The servient estate

The servient estate is the estate that has burdened by the easement

55
Q

 A shared driveway agreement will probably take the form of a(n)

A. Voluntary lien
B. Affidavit of entitlement
C. Easement Appurtenant
D. Certificate of usage

A

C. Easement appurtenant

An easement Appurtenant will run with the land and go to future owners of the property

56
Q

A party wall

A. It’s located only on a servient estate
B. Faces a main road
C. Straddles a boundary line
D. His own by one party

A

C. Straddles a boundary line

A party wall is a shared wall between two adjacent parcels of land


57
Q

The lien with the first claim against real estate is

A. A mechanics lien
B. Whatever Lee was first recorded
C. A first mortgage
D. The property tax

A

D. The property tax

Property taxes and special assessments take priority over other liens and will be paid first

58
Q

Caveat emptor means

A. Seller beware
B. Brokers beware
C. Buyer beware
D. Client beware

A

C. Buyer beware

This means buyer beware in Latin

59
Q

Which of the following is NOT realty

A. Fee simple estate
B. Freehold estate
C. Timber
D. Life estate

A

C. Timber

Timber is a form of personal property or chattel

60
Q

Ownership of which of the following is evidenced by proprietary lease

A. Condominium
B. Cooperative
C. Timeshare
D. Rent controlled apartment

A

B. Cooperative

In a co-op the owner receives a proprietary lease

61
Q

Which type of lease only involves a long-term lease of land

A. Net lease
B. Gross lease
C. Ground lease
D. Percentage lease

A

C. Ground lease

A ground lease involves a long-term lease of land

62
Q

Impaired physical and mental development in children is a symptom of which of the following environmental hazards

A. Inhaling asbestos fibers
B. Presence of leaking underground storage tanks
C. Lead poisoning
D. Radon

A

C. Lead poisoning

A casual connection has been determined between lead poisoning and impaired mental development

63
Q

The principle that the worth of a lesser quality property is enhanced by the presence of a nearby property of greater quality is

A. Proximity
B. Progression
C. Competition
D. Enhancement

A

B. Progression

This would be the economic principle of progression

64
Q

How many additional hours of study are required for a licensed sales person to become a broker in Rhode Island

A. 22.5
B. 25
C. 35
D. 90

A

D. 90

90 additional hours of study are required to become a broker

65
Q

The multiple listing service is a

A. Government program
B. Service for cooperating brokerages
C. Service for elderly people
D. Program for unemployed agents

A

B. Service for cooperating brokerages

A service for cooperating brokerages

66
Q

A violation of license law is legally classified as a(n)

A.  Infraction
B. Offense
C. Misdemeanor
D. Felony

A

C. Misdemeanor

This is a misdemeanor

67
Q

Regulation Z does not cover which of the following properties

A. One unit family dwelling
B. Two unit family dwelling
C. Commercial
D. Residential

A

C. Commercial

Regulation Z does not apply to commercial real estate

68
Q

Which of the following is not considered a fiduciary duty

A. Loyalty
B. Confidentiality
C. Accountability
D. Assumability

A

D. Assumability

Remember OLDCAR. Assumability is not a fiduciary responsibility

69
Q

Which of the following agency relationships, if entered into without a full written disclosure and consent of the parties, is illegal in Rhode Island

A. Open
B. Dual
C. Seller
D. Cooperative

A

B. Dual

Dual agency requires written consent from seller and buyer

70
Q

A loan that is paid in 26 half-month payments each year is referred to as what type of mortgage

A. Amortized
B. Biweekly
C. Balloon
D. Bi monthly

A

B. Biweekly

The loan is biweekly

71
Q

A person who dies without making a will is said to be

A. In probate
B. Intestate
C. A testate
D. A non-Legator

A

B. Intestate

A person that dies without a will is intestate

72
Q

The principle that no physical economic condition remains constant is

A. Progression
B. Change
C. Flux
D. Anticipation

A

B. Change

The principle of change states that no economic condition remains constant

73
Q

All of the following constitute discriminatory actions on the part of the broker EXCEPT

A. Refusing to deal with an individual because of his or her race
B. Telling a perspective tenant that there are no units available in a building when in fact units are available
C. Offering complete relocation services to Catholic while protestants are left to search the MLS lists unassisted
D. Showing properties to perspective buyers only in certain, geographic neighborhoods the buyers asked to see

A

D. Showing properties to perspective buyers only in certain, geographic neighborhoods the buyers asked to see

This is showing the customer what they want and it’s not discriminatory

74
Q

A report of recent sales of similar properties intended to assistant owner and setting a reasonable listing is a

A. Appraisal
B. Certified market analysis CMA
C. Comparative market analysis CMA
D. Current market abstract CMA

A

C. Comparative market analysis CMA

This is a comparative market analysis CMA

75
Q

A real estate broker who’s office engages in restraints of trade is violating the

A. Civil rights act of 1868
B. Sherman anti-trust act
C. General obligations law
D. Law of agency

A

B. Sherman antitrust that

The broker would be in violation of the Sherman antitrust act

Real Estate (4 decks)

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