State Test Flashcards
Mark (the broker), is selling Maria’s house (the client). Who determines the amount of commission paid in a transaction?
Principal/client and broker
If an ad for a property states that the property is near the vicinity of a geographical area, what else must the ad include?
And if geographical area the location is located
Key Points to Know:
Definition: A written explanation, to be signed by a prospective buyer or seller of real estate, explaining to the client the role that the broker plays in the transaction.
– The Agency Disclosure Form is signed at the first substantive contact.
When should the Agency Disclosure Form be submitted?
: At the first substantive contact
The Property Condition Disclosure Act requires the seller to submit to the buyer, a ‘Property Condition Disclosure Statement, prior to signing the contract of sale
Not signed buyer receives $500 credit
Definition:
Someone authorized to transact every kind of business for the principal.
Example: Property Manager
General Agent
Special agent
Definition:
An agent with limited authority to act on behalf of the principal, such as created by a listing.
Example: Real Estate Agent / Real Estate Broker
What type of listing agreement is it where the listing broker earns a commission for the sale of the property, even if the owners themselves sell the property?
Exclusive right to sell
Principal or Client
Buyer or seller
Real Estate Salespersons/Agents DO NOT collect money or commissions.
It’s paid to the broker
Elements of an Independent Contractor:
– Pay their own taxes on commissions
– Responsible for paying social security taxes and self-employment taxes.
– Have no set work hours
– Have no specific job location
– Can be employed with another company or employer
– Covers his/her own expenses (transportation, cell phone, clothing)
– Either party can terminate the relationship at time
As independent contractors, what can sales agents be provided by their sponsoring broker?
Office phone
What type of estate is created when only one person holds title to real property?
Ownership in severalty
Marcus was not paid for the supplies and labor he provided to homeowner Sam during a recent renovation of Sam’s house.. What kind of lien will be filed against Sam?
Mechanics lien
A mortgage lien is an example of a ?
specific lien.
Fee simple estate
Absolute ownership of real property; a person has this type of estate where the person is entitled to the entire property with unconditional power of disposition during the person’s life and descending to the person’s heirs or distributees.
Most properties in ny have what kind of deed
Fee simple estate deed
1) Unless determined to be a lesser estate, the transfer of title to real property in NYS creates what type of interest?
Fee simple
Conveyance
The transfer of the title of land from one to another. The means or medium by which title of real estate is transferred.
The transfer of title to real property is also known as?
Conveyance
There are 3 acceptable types of property descriptions:
1) Metes and bounds
2) Description by reference, lot and block
3) Monuments
1) What clause in the deed describes the property?
Legal description
Covenants in a deed provide what?
That the grantee will own the property and has a right to convey it or right of quiet enjoyment.
What is the summary of the chronological history of title and related documents to that called?
Abstract of title
What capabilities must a party possess in order to enter into a valid contract?
Mentally and emotionally capable and must be 18 years of age
4) Who signs the contract first?
Purchaser
What is a loft lease?
Answer: A lease for space that is not divided into rooms
Percentage lease
A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.
Which types of commercial properties use percentage leases?
Retail store/ shopping mall
Who is responsible for the terms in the lease if the unit has been subleased
Leasee or tenant
Which clause in the lease allows landlords to raise rents during the term of the lease?
Escalation clause
An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.
Ground lease
This long-term lease (also referred to as a land lease) is commonly used for commercial property.
A type of short-term loan, typically taken out for a period of 2 weeks to 3 years.
A bridge loan is a type of gap mortgage in which funds are provided over and above an already existing loan until more permanent financing is in place.
Swing loan- gap loan
1) What type of financing is used to purchase a new property when the old property hasn’t been sold yet?
Swing loan
Mortgagor is the
Borrower
Mortgagee is the
Lender
Real Estate Settlement Procedures Act (RESPA)
Definition:
A consumer protection statute, first passed in 1974. The purpose of RESPA are
1) To help consumers become better shoppers for settlement services and
2) To eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
RESPA requires:
1) A Good Faith Estimate (GFE)
2) HUD Booklet
3) HUD Form No.1
1) What does the Real Estate Settlement Procedures Act (RESPA) require?
Good faith estimate of the closing costs for federally funded loans
Wraparound mortgage
form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.
A new mortgage that is higher in amount wraps around an existing first mortgage that’s smaller in amount is known as what?
Wraparound loan
Secondary mortgage
Key Points to Know:
The primary mortgage market is the lending institution where the mortgage originates
Example: Bank of America gives a loan to the homeowner.
The secondary mortgage market is where the loans originated in the primary mortgage market are bought and sold.
The Truth in Lending Act of 1968 is United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
Truth in lending act
The NYS Department of Financial Services registers and licenses all companies and individuals who conduct mortgage related services in New York.
NYS Department of Financial Services (formerly known as the NYS Banking Department
Occurs when the monthly payment is less than full interest and does not pay any principal. The interest that is unpaid accrues and the principal balance owed increases.
Negative amortization
States that the borrower cannot pay off the loan at any time before expiration of the full mortgage term without a financial penalty for early payoff.
Prepayment penalty clause
Eminent domain
right of the government to acquire property for necessary public use by condemnation; the owner must be fairly compensated.
Polychlorinated bihpenyls (PCBs)
PCBs were widely used as dielectric and coolant fluids, for example in transformers, capacitors, and electric motors.
carcinogenic component was used as insulation in electric transformers that contaminated soil and groundwater
1) What is a CMA (Comparative Market Analysis) NOT?
It is the following
a) An estimate
b) A theoretical value
c) An opinion
appraisal
One of the causes of depreciation. It is the loss of desirability and usefulness caused by new inventions, changes in design, and improved processes for production, or from the influence of external factors. Obsolescence may be either economic or functional.
Obsolescence
no exemptions and contains the blanket statement that ‘citizens have the same rights to inherit, buy, sell, or lease real and personal property.
Prohibits racial discrimination
Civil right act of 1866
1988 Amendment to the Civil Rights Act
added two new protected classes:
– Persons with mental or physical disabilities
– Familial status
What is convincing owners to sell/lease property by telling them a particular group of people are moving into the area called
Block busting
Red-lining
The refusal to lend money within a specific area for various reasons. This practice is illegal.
Before the Fair Housing Act, some lenders circled certain local areas with a red line on the map, refusing to make loans within the circled areas based on some characteristic of property owners in the area.
Areas
1 side x 1 side = area of a square
width x depth = area of a rectangle
½ base x height = area of a triangle (remember a triangle is equal to ½ of a rectangle)
1 Acre =
1 Hectare =
43,560 square feet
2.47 Acres
Debt to income Ratio
Key Points to Know:
The percentage of a consumer’s monthly gross income that goes towards paying debts.
Formula: Recurring monthly debt / Gross Monthly Income
The Municipal engineer performs the following basic functions:
– Estimate the costs of paving ,sewers and sidewalks, and other public works projects.
– Supervise streets and other public works activities
– Issue permits to private contractors for street openings and curb and gutter construction.
– Assume responsibility for sewage, water supply, distribution systems.
The NYS Department of Health performs the following basic functions:
– Drinking water safety, including standards for private and community well construction and well water safety and regulation.
– Septic tank approval.
– Certain wastewater treatment approval.
Oversees and upholds the quality and aesthetics of a neighborhood, town, or city.
– approves new construction and remodeling following local zoning ordinance laws.
– promotes the orderly and harmonious development of the municipality.
– protects a municipality’s cultural heritage.
Architectural review board
within historic districts for compliance with standards established for new development or alteration or improvement of historic buildings and landmarks
– recommend to the municipality the adoption of ordinances preserving historic districts, landmarks, and historic sites.
– review and approve application for construction, alteration, demolition, and relocation of a historical property.
– recognize sub-districts within a preservation district. Allows the commission to adopt guidelines regulating properties in the sub-district.
Historic Preservation / Landmark Commissions
local elected or appointed government board charged with recommending to the local town or city council the boundaries of the various zoning districts and appropriate regulations to be enforced therein.
– prepare and amend a master plan for the community.
– implement the master plan through site plan and subdivision ordinances and recommendations to other agencies.
– make investigations, maps and reports, and recommendations that relate to the planning and development of the municipality.
– recommend amendments to the zoning ordinance or map.
PLANNING BOARD
Umbrella Policy
Insurance policy that covers amounts above those covered under one or more other primary policies, and which does not pay until the losses exceed a certain sum. Also called excess insurance.
What covers fully for personal property lost in a fire
Replacement cost
HO-3Special form policy
HO-3: Special Form Policy – the most widely used and recommended homeowners policy. It covers the home for all risks or physical loss except damage caused by flood, earthquake, war, or nuclear accident.
HO-4: Tenants or Cooperative Owners Policies –
Commonly referred to as renters insurance, regardless if you are renting a home, condo, or apartment. This policy also covers cooperative owners since they hold a proprietary lease (not real property)
Insure against damage to the contents of an apartment, cooperative, or condominium.
HO-6: Condominium Unit Owners Policies –
Assessed value
A valuation placed upon property by a public officer or a board, as a basis for taxation.
Tax Assessing Units may elect to establish separate tax rates for homestead and non-homestead properties.
Homestead properties include: – 1-3 family houses – Condominiums – Mixed-use properties when they are mostly residential – Mobile homes – Vacant land under 10 acres – Farm land / farm dwellings
HOMESTEAD PROPERTIES
Non-homestead includes everything else:
– Commercial
– Industrial
– Special franchise
– Utility properties
In summary:
Homestead = Residential
Non-homestead = Commercial
👌🏼
Protesting an assessment
Key Points to Know:
When protesting an assessment, the owner must file a complaint, also known as a grievance. The grievance is heard by the Board of Assessment Review (BAR).
The law assumes the assessor is correct, therefore, the burden of proof is on the complainant to prove the assessor incorrect.
The four grounds for review in New York are unequal assessment, excessive assessment, unlawful assessment, and misclassification.
An amendment that added two new protected classes: personas with mental or physical disabilities and familial status.
1988 Amendment to Civil Rights Act -
Conveyance
Transfer
- A law with no exemptions and contains the blanket statement that citizens have the same rights to inherit, buy, sell, or lease real and personal property. The law intended to prohibit racial discrimination.
Civil Rights Act of 1866
HOMESTEAD properties
Residential properties that include 1-3 family properties, condominiums, mixed-use parcels that are mostly residential, mobile homes, vacant lots less than 10 acres, farm land/dwellings.
Regulation Z
Regulation Z – The Truth in Lending Act of 1968 is United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
A section of land contains how many acres?
640 acres.
The Sherman Antitrust Act
does not allow tying (tie-in) agreements. To “tie” writing an offer to securing the listing is not allowed. The agent must write their offer and ask for the listing. The buyers can choose anyone to list their property. (Hopefully they would select the agent writing the offer.)
Buyers met an agent at an open house. In order to buy the listed property, the buyers needed to sell their house. The agent wrote an offer to purchase with the following terms. “Purchasers shall list purchasers property at 567 Main Street, Your Town, Your State with XYZ Realty within 24 hours of the acceptance of this offer, or this offer shall become null and void and the earnest money shall be refunded to the purchaser.” Is this legal?
No it’s a violation of the Sherman act
person died testate. After an extensive search, no additional heirs were found. The person’s real property would transfer by
When a person dies testate, it means the person died with a will. Real property is devised or transferred by the will. If a person dies intestate, or without a will, the laws of descent and distribution are followed. Demise is to give up the right of possession in a lease. (Yes, it also means someone has died.) Escheat means the property reverts to the state when it is classified as abandoned. This may happen when someone dies intestate and no heirs can be found.
Agnes, Zelma and Jayne are sisters and own a property as joint tenants. Jayne sold her share to Maggie. Upon closing, Maggie is a
Tenant in common.
Joint tenancy requires the unities of time, title, interest and possession. When Jayne sells her property to Maggie, the unity of time and title is breached. Agnes and Zelma are still joint tenants, but Maggie would be a tenant in common with them
In 1969 Carmel purchased a condo for $15,000. Today she sold the property for $85,000 and agreed to finance the loan for the buyer.
This transaction is known as a/an
land contract is also known as an installment sale. The seller agrees to finance the property in a land contract.
potential buyer asks the agent if all the buildings were within the boundary lines. The only way this could be determined would be to
Survey of the property
Lead paint test when
federal law, sellers are required to complete the lead-based paint disclosure form on properties that were built prior to 1978.
lender has hired an appraiser. The appraiser has MOST LIKELY been hired to
Market value of property
How old
For a reserve mortgage
revesre mortgage can only be originated by someone 62 years of age or older.
If a listing expires how long to contact
of the brokerage firm may call the seller for up to 18 months even if the seller is on the no-call list. If the seller requests not to be called, the lsiting agent and broker firm must honor that request.
What is it illegal to do when listing House
Remember, describe the property, not the people! It is legal to say that a house has a wheelchair ramp.
An agent received a thank you note from a lender for the referral of a buyer. The note included a $35 gift card to a local restaurant. The law that makes this kickback illegal is
The Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks from service providers.
In 1969 Carmel purchased a condo for $15,000. Today she sold the property for $85,000 and agreed to finance the loan for the buyer.
This transaction is known as a/an
A land contract is also known as an installment sale. The seller agrees to finance the property in a land contract.
Which of the following would be future interests in a fee simple defeasible estate
A fee simple defeasible estate
means that the title may revert upon the occurrence or non-occurrence of a specified event. The two types of fee simple defeasible estates are special limitation with the possibility of reverter and condition subsequent with the right of re-entry.Fee simple estate
- Of the many expenses involved with owning a house, which of the following are tax-deductible?
D
a. Taxes
b. Insurance
c. Interest
d. Both a and c
The monthly net income on an investment of $115,000 if the rate of return is 12 ½ percent is _____________.
$115,000 x .125= $14,375
14,375 / 12 =$1,197.92
- You sell a home for a client and the client receives $32,800 in cash after she pays off her mortgage. The mortgage payoff amount was $80,000. The client paid six percent in commissions. What did you sell the house for?
. $120,000
The Real Estate Settlement Procedure Act (RESPA) applies to what types of real estate transactions?
Federal related mortgage loans
If a deed is valid it must be
Signed and witnessed
How much time must the parties to a real estate closing be given to review the HUD statement?
One day before closing
Which of the following is considered a good balance between the supply of and demand for apartments?
5%
Which of the following types of discrimination are prohibited by the Fair Housing Act of 1968?
of children
- A valid real estate contract must contain which of the following elements?
D
a. Competency
b. An offer and an acceptance
c. A “legal object”, i.e., a property
d. All of the above.
You can only appraise a listing if you are a certified appraiser, unless it is a residential property and you are appraising it for listing purposes only.
True
A basic owner’s title insurance policy will cover all of the following except ________________.
Building permit violations
What must a homeowner in foreclosure do to exercise his right of redemption?
d. Pay the entire mortgage, plus court costs, legal fees and interest
Which of the following types of mortgages will probably have the lowest initial interest rate?
d. Conventional 30-year ARM
A woman is deeding her mortgage-free house to her son. Is the deed required to show “good consideration” to be valid in this case?
Yes, unless she is deeding it to him in her will.
Which is the law that allows one to appeal a decision made by DOS?
Article 78
Real estate professionals are required to take how many hours of continuing education every two years?
22.5
What is the license which allows one to deal with apartments and charge fees?
Apartment information vendors
For a deed to be recorded, it must be in writing and:
For a deed to be considered valid the Grantor (owner) must sign the deed. The Grantee does not have to sign the deed for it to be a valid transfer
Which of the following is the term for allowing a change to occur in a real estate transaction between two or more parties?
disclosure with informed consent
Changes can be made to any real estate transaction as long as all parties are informed and all parties agree to the change. We call this disclosure with informed consent
Another term for the transfer of real property is:
Alienation
is the giving or transfer of real property to another.
Which is the law that allows one to appeal a decision made by DOS?
78
Real estate professionals are required to take how many hours of continuing education every two years?
22.5
Another term for the transfer of real property is:
Alienation
would be a week to week, month to month or year to year tenancy
Periodic estate
ownership in land for an indeterminate length of time.
Freehold estate
broker will earn any amount of money over a set sales price as commission. This will pit the broker’s commission against the seller’s net proceeds.
Net listing
encumber more than one property. Sub-dividers commonly use this type of mortgage.
Blanket mortgage
one that is subordinate to an existing lien on the same property. Priority is usually set by recording date.
A lien after the 1st mortgage
Junior mortgage
Which of the following is an attachment that gives a lender the right to seize the personal property of a borrower who has not fulfilled their obligations of a loan?
Attaches to person and all they own
General lien
The lien that is paid first in a court auction is which of the following?
Takes priority over other liens
Real estate tax
A deed is usually recorded at
County clerk courthouse
Real estate appraiser is licensed by the
State
Which of the following is seller financing?
A
Purchase money mortgage
How old must one be to qualify for a reverse annuity mortgage?
62 or older
What approach does an appraiser use to estimate the value of a 1 - 4 unit dwelling?
Saw comparison
1-4 unit is residential
The number of square feet in 1 square yard is
9
Question 30 Explanation: 3 feet x 3 feet = 9 square feet
Appraisal report must be
In writing
Assessed value is usually used by the
Government
Used when calculating taxes
process of combining adjacent parcels of land to form one larger parcel is
Assemblage
Combined parcels for a greater value is plottage. The process is assemblage
engineer that draws an aerial view of the lot is known as the
Land surveyor
Outline the property boundary
The land owner that has the right to use an easement over another person’s land is
Dominant
States that benefits from the easement
A visual easement is called
Negative
The starting point in drawing a survey is called
Point of origin
Point of beginning
Rent for a 50 by 80 feet office is $830 per month. What is the annual rent per square foot?
830 x 12 = $9960 rent/year 50’ x 80’ = 4000 square feet $9960/4000 sq ft = $2.49 per sq ft
Question 47WRONG Which of the following is an example of the bundle of rights? A mortgage air rights C leases all of the above
All of the above
The bundle of rights consists of possession, enjoyment, disposition, control and exclusion.
In NYS, how many related exchange points are required to qualify for a Broker’s License?
5250
Which fiduciary duty is involved when temporarily holding someone’s money?
Accountability
trustee represents the
beneficiary
They are he lender
A Subagent represents the
Seller
The brokers client
Which ownership contains the Right of Survivorship?
tenancy by Entirety
And
Joint Tenancy
Which type of ownership has a condition of married at the time of purchase?
Tenants by entirety
The engineer that draws the dimensions of the land is called a(n)
Surveyor
identify the boundaries and area of a parcel of land.
An encumbrance is also known as
Lessens bundle of rights
Lien is
charge against a property that provides security for a debt.
A leasehold estate is a
Personal property
This document provides detailed information on a condo or coop development?
Offering plan
This document governs issues such as noise, pets, etc., in a co-op?
House rules
Coop is what type of ownership?
Leasehold
1) This right is reserved for the condo association, which gives them the first opportunity to buy or lease a unit when it becomes available?
Right if first refusal
1) The process that calculates the value of an asset in the past, present, and future is known as what?
a) Time value of money
b) Rate of return
c) Leverage
d) Internal rate of return
Time value of money
Formula: Cash Flow (on a yearly basis) / Down Payment.
Sample Question:
1) What is the cash-on-cash return on a $2,000,000 property with a down payment of $500,000 and $15,000 of monthly rental income?
a) 34%
b) 35%
c) 36%
d) 37%
36%
Industrial investment properties include the following:
– Heavy manufacturing – Light manufacturing – Multi-tenant – Owner Occupied – Self Storage – Special Purpose – Warehouse / Distribution
Personal residence tax break
Home sellers may be eligible to exclude up to $250,000 if single or up to $500,000 if married of the capital gain on the sale of the residence.
Who is usually exempt from property taxes?
Disabled, veterans, farmers, elderly, gold star parents (whose kids died in war), and Star program homeowners.
Straight-Line Depreciation – For residential
27.5 years
Key Points to Know:
Active income – earned through salaries or in a business in which the taxpayer actively participates (Example: a typical job)
Passive income – Invested funds
Portfolio income – Interest, annuities, dividends, and royalties
Sample Question:
1) Partnership investments are designated as what type of income?
Portfolio
Fixing a leaking faucet is known as what type of maintenance?
Corrective
What is the budget that is set aside for repairs and large improvements?
Capital reserve budget (aka replacement reserve budget)
