State Exam Prep 1 Flashcards
The clause in a deed that contains the words “bargains and sells” or similar words is the
granting clause.
Which statement concerning a consumer complaint is FALSE?
The person named in a complaint must be a real estate licensee.
Freddie Mac is a
secondary market for SAs.
Freddie Mac provides a secondary market for loans originated by savings associations.
When associated with real estate finance, the term leverage means
the use of borrowed funds to minimize the necessity for a borrower to use his own money.
A buyer has made an earnest money deposit of $10,150 on a house selling for $94,500. A local lender has agreed to lend 85% of the selling price at 4½% interest for 30 years. If the buyer’s closing costs amount to $1,575, how much more cash must the buyer produce at closing?
$5,600
$94,500 × .15 = $14,175 down payment;
$14,175 + $1,575 closing costs = $15,750; $15,750 total buyer costs – $10,150 earnest money = $5,600 cash at closing
The essential elements of a deed do NOT include
A) under seal.
B) consideration.
C) delivery.
D) witnessing.
A. under seal
A type of contractual agreement having all essential elements of a contract plus a property description and a definite term of tenancy specified creates which type of interest in real property?
Leasehold
What type of evidence unless refuted by evidence to the contrary will prove a case?
Prima facie
A property owner defaulted on the mortgage. Prior to foreclosure, the owner paid the lender the missed mortgage payments, plus the expenses incurred by the lender as a result of the default. Which mortgage provision allows the borrower to make mortgage payments as specified in the promissory note?
Right to reinstate
(The right to reinstate is the mortgagor’s right to reinstate the original repayment terms in the note after the lender initiated the acceleration clause.)
In a valid option contract to purchase real estate, the optionee
A) is limited to a refund of the option consideration if the option is exercised.
B) has no obligation to purchase the property.
C) is the prospective seller of the property.
D) must purchase the property within the option period.
B
A commercial property leases for $200,000 per year. Miscellaneous income derived from the property totals $12,000 per year. The property recently sold for $1,395,000. What is the GIM?
$200,000 lease income + $12,000 other income = $212,000 total income;
$1,395,000 ÷ $212,000 = 6.58 or 6.6 GIM
A range is numbered to the
east or west of a principal meridian.
What number of years has the IRS established as the useful asset life for nonresidential income-producing property for calculating depreciation?
39
A grandfather clause in a zoning ordinance probably would allow an owner to
A) convert a three-room structure into two large rooms.
B) enlarge a building that is a nonconforming use.
C) rebuild a structure 60% destroyed by fire that is a nonconforming use.
D) reshingle the roof of a structure that is a nonconforming use.
D
If the Fed decides to sell securities through open-market bulk trading, the result will be
a decrease of money in circulation.
The effect of positive leverage is to increase the
borrower’s return on equity.
After contracting to sell and unless otherwise agreed, the seller is responsible for
existing liens.
Special assessments are
used to help pay for some public improvement that benefits the property.
A buyer applied for a 30-year, fixed-rate $105,000 mortgage. The lender will grant the loan if the buyer will pay interest at the rate of 4.5% plus three points and a 1% loan origination fee. What are the total loan charges if the buyer decides to take the loan offer?
$105,000 mortgage × .03 points = $3,150 cost of points;
$105,000 mortgage × .01 = $1,050 loan origination fee;
$3,150 + $1,050 = $4,200 total loan charges
A broker of a large office hired a certified public accountant (CPA) and a full-time bookkeeper to manage the escrow account. Which statement is TRUE regarding this situation?
A) The broker is required to personally prepare the monthly escrow account reconciliation statement.
B) The broker is relieved of liability in the event there is an escrow violation because a certified CPA has been hired to manage the escrow account.
C) Both the CPA and the bookkeeper must also hold a real estate license if they are going to write checks on the escrow account.
D) The broker must be a signatory on the escrow account.
A. The broker must be a signatory on the escrow account.
A sales associate has helped a buyer locate a home for which the buyer has made an offer to purchase. The buyer gives the sales associate an earnest money check of $2,500 payable to a title company. Which applies?
The sales associate must indicate the name, address, and telephone number of the title company on the purchase and sale agreement.
A subdivision plat map
indicates the size and location of individual lots, streets, and utilities.
Buyer and seller are discussing the type of deed that is to be conveyed. The buyers are requiring a guarantee that the seller owns the property and has a legal right to sell. This guarantee is part of which clause in the deed?
Seisin
A first mortgage holder can agree to take a lower lien priority using which instrument?
Subordination agreement
A broker wishes to be issued several broker licenses for business reasons. She may
request multiple licenses.
Which violation is a third-degree felony?
A) False and misleading advertising
B) Reproduction or theft of a real estate license exam
C) Failure to account for and deliver escrow funds
D) Provide inaccurate and out-of-date rental information for compensation
B) Reproduction or theft of a real estate license exam
(Falsifying a license application and unlicensed practice of real estate are third-degree felonies. Theft or reproduction of a license exam are third-degree felonies.)
Which characteristic might be classified as functional obsolescence?
A) Neighborhood is 60 years old.
B) Property fronts on a busy expressway.
C) Exterior needs repainting.
D) Property has a one-car garage.
D) Property has a one-car garage.
Fannie Mae does NOT
A) buy FHA and VA loans.
B) sell mortgages to institutions.
C) purchase conventional loans.
D) originate federal loans.
D) originate federal loans.
