Test Cards - State Flashcards
Which of the following is a responsibility of the Tennessee Real Estate Commission, as provided in the Tennessee Real Estate Broker License Act?
- The right to appoint a governor
- The right to establish easements and subdivision regulations
- The right to grant and renew licenses
- The right to limit the number of brokers allowed in the state
- The right to grant and renew licenses
The ______ enforces federal fair housing laws at the state level in Tennessee.
Tennessee Human Rights Commission
The Tennessee Human Rights Commission is the agency responsible for enforcing federal and state fair housing laws.
Marissa is the seller, Tommy is the buyer. Marissa’s agent is Tony, and Tommy’s agent is Layton. In Tennessee, who must complete the property condition disclaimer statement?
Marissa
Only the seller is allowed to complete the property condition disclaimer statement.
Which of the following is required on any Tennessee real estate advertising?
- Business name and office phone number
- Personal contact information
- Personal photo
- Sales volume
- Business name and office phone number
Stan wants to drum up business, so he decides to hold a lottery-style contest, offering prizes to anyone who does business with him in November, and a big prize to the lottery winner. What must he be certain to do?
Obtain his broker’s approval.
What responsibility does a broker have when a licensee wants to change brokerages?
Immediately sign TREC’s Transfer, Release and Change of Status Form to release the licensee.
You used REALTOR® on your business card although your membership in NAR expired last year and you didn’t renew it. What type of violation is this?
Untruthful advertising
Which of these Tennessee licensees could be seen as committing a real estate violation?
- Before showing a buyer customer his listing, Mitchell explained to the buyers that he represents the sellers.
- Henry provided customers with a copy of their signed broker engagement agreement.
- Isabelle keeps all signed broker engagement agreements in a safe but accessible location in the broker’s office.
- Mandy didn’t disclose to potential buyers that she was showing her own listing, or that she represents the sellers.
- Mandy didn’t disclose to potential buyers that she was showing her own listing, or that she represents the sellers.
Derek made an on-site inspection of the timeshare project prior to signing the contract. He signed the contract, but is having second thoughts. In Tennessee, how many days does Derek have to cancel the contract?
10 days
Applicants for a Tennessee real estate license must submit a special form if they’ve been convicted of theft of money, services, or property in the past ______ years.
10
(Applicants who have been convicted of theft or subject to a licensing authority’s disciplinary action within the past 10 years must submit a form detailing their criminal history.)
Marcus, a Tennessee listing agent, told a potential buyer that his seller client’s property had no flooding issues, though the seller had mentioned water in the basement a few years back before the yard was properly graded. Which of these statements is true?
- Marcus committed intentional misrepresentation because he knew his statement was false.
- Marcus committed unintentional misrepresentation.
- Marcus didn’t commit misrepresentation, because the property current has no flooding issues.
- Marcus is guilty of puffery.
- Marcus committed intentional misrepresentation because he knew his statement was false.
Which of the following items is included on both the commercial and residential purchase and sale agreements?
- Amount of earnest money
- Appraisal contingency
- Financing contingency
- Property condition disclosures
Amount of earnest money
(The appraisal contingency, financing contingency, and property condition disclosures are all found on the residential sales contract. Only the earnest money is addressed in both the commercial and residential agreement.)
Which of the following should Tennessee licensees avoid because it can attract thieves?
- Giving referrals
- Posting friend requests
- Posting photos of clients’ expensive belongings
- Turning off location information
- Posting photos of clients’ expensive belongings
Determine which of these is an example of commingling in Tennessee.
- Cynthia deposited her client’s earnest money check into the firm’s operating account.
- Jenson deposited his client’s earnest money check into the firm’s trust account.
- Jessica deposited her commission check into her brokerage firm’s operating account.
- Sean withdrew funds from the firm’s trust account to pay the rent.
- Cynthia deposited her client’s earnest money check into the firm’s operating account.
(Commingling occurs when funds in or intended for a trust account are intermixed with operating or personal funds.)
Whose responsibility is it to ensure that a prospective buyer receives a copy of the Tennessee Residential Property Condition Disclosure prior to the buyer making a written offer to the seller?
The buyer’s agent
The buyer’s agent is responsible for collecting and reviewing the disclosure with their buyer client.
Rhonda is a Tennessee affiliate broker. She decides to keep all of her transactional records in electronic format. This means that Rhonda ______.
- Is breaking the law
- Is committing an ethical breach
- Must be able to produce them within 24 hours
- Must include off-site hard copies as well
- Must be able to produce them within 24 hours
In accordance with Tennessee law, transaction records should be maintained for a period of ______.
Three years
Where must required information, such as contact information, be included on your website?
On every page
Which of the following is a true statement about filing a civil suit related to a complaint in Tennessee?
- Civil suits can be filed only after the commission review of the complaint is complete.
- Civil suits must be filed prior to initiating a commission complaint.
- Complainants can pursue a civil suit independently.
- Complainants must choose either commission review or a civil suit.
- Complainants can pursue a civil suit independently.
Tennessee and federal fair housing laws share a similar exemption regarding non-commercial housing owned and operated by ______, but Tennessee doesn’t include private clubs in that exemption.
Religious organizations and non-profits
Which of the following types of advertising must comply with Tennessee’s advertising rules?
- All forms must comply
- Chat rooms
- Instant messaging
- Social media
- All forms must comply
Which of the following statements about Tennessee brokers and license law violations is true?
- Brokers can have their license suspended or revoked because of any unlawful act or violation committed by one of their affiliated brokers.
- Brokers convicted of a violation will have their license automatically revoked within 30 days.
- If a broker has committed a violation, the broker’s license can be downgraded to affiliate broker status.
- There are no broker-specific violations.
- If a broker has committed a violation, the broker’s license can be downgraded to affiliate broker status.
(The commission has the authority to downgrade a broker to affiliate broker status if a broker has committed a violation of the real estate act. This action can be in addition to or in place of any other lawful disciplinary action against the broker.)
Disciplinary action in Tennessee can be taken for a very specific violation, such as lying about a conviction, or very broad violation, such as ______.
- Forgetting to let TREC know you’ve changed brokers
- Improper dealing
- Leaving a broker’s name off a business card
- Using a false name
- Improper dealing
Which of the following is true about errors and omissions insurance?
- It covers deliberate fraud.
- It covers licensees sued by consumers for inadvertent mistakes.
- It covers violations of real estate regulations.
- It doesn’t assist with managing risk.
- It covers licensees sued by consumers for inadvertent mistakes.
Deborah, a sponsoring broker, is required to display the licenses of ________.
All affiliate brokers, both independent contractors and employees
(The sponsoring broker must display the licenses of everyone affiliated with the brokerage, including employees, independent contractors and their own license.)
Mary and Shawn are both Tennessee affiliate brokers working under Lawrence at Broker One. Mary represents the buyer and Shawn represents the seller as designated agents in a sale that’s scheduled to close in two weeks. Who’s the dual agent in this transaction?
No one
To prevent commingling and accidentally using the funds from one income property to pay for the expenses of another, a Tennessee broker should ______.
Establish a separate escrow account for each property.
Ondine, a principal broker in Tennessee, has a legal responsibility to review all of the following documents for accuracy and in a timely manner EXCEPT for which one?
- Consumer reports
- Counter-offers
- Listing agreements
- Purchase offers
- Consumer reports
Licensees in Tennessee are required to keep transaction documents for a minimum of ______.
Three years
William has been issued his first affiliate broker’s license in Tennessee. How long is the license valid?
Two years
Jada, who hadn’t made an on-site inspection of the timeshare project prior to signing the contract, rescinded her timeshare contract during the allowable 15-day time period. How many days from the day of rescission and notice of cancellation does the seller have to refund any payments Jada made?
30 days
When trust funds are deposited into an interest-bearing trust account in Tennessee, the broker must obtain which of the following from all parties?
- Consent from all parties involved in the transaction
- Consent from the banking institution
- Consent from the Federal Deposit Insurance Corporation
- Consent from the real estate commission
- Consent from all parties involved in the transaction
Millie is a buyer and has given her agent an earnest money check for $10,000 with an offer to purchase a house in Knoxville. When will the check be deposited?
Immediately after the purchase offer is accepted by the seller
In property management, what’s the legal and binding Tennessee contract that spells out the duties for both the property manager and property owner?
Property management agreement
Ed is an affiliate broker in Tennessee. How many hours of continuing education must he complete before the license expiration date in order to renew his license for another two years?
16 hours
Jordan, a Tennessee principal broker, receives an earnest money check from her client. How long does she have to deposit the money into an escrow account?
She should deposit the money immediately upon the acceptance of an offer.
In Tennessee, what’s a consumer?
Someone who uses or purchases a product or service
Farrah is a Tennessee affiliate broker. She has a system for keeping copies of all her client correspondence, including emails, faxes, and phone logs. Which aspect of a normal professional routine is Farrah demonstrating?
- Because she uses the records to maintain customer contact.
- Because she wants to be a top producer, and organization is one of the strategies that helps her achieve that goal.
- Because Tennessee law requires her to maintain these records for three years.
- So that she can use her past mistakes to learn and improve from, rather than just forgetting about them.
- Because Tennessee law requires her to maintain these records for three years.
A default to facilitator policy is an attempt to avoid what?
Dual agency
Ralph is a broker whose license was suspended when one of his affiliated brokers committed a violation. This is mostly likely because ______.
Ralph either knew about the violation or is guilty of failure to supervise
You’re the seller’s agent for Tira Miller. Jenny Oostburg is a potential buyer. What best describes Tira’s relationship to you?
Client
In Tennessee, what’s the pre-licensing education requirement for brokers?
120 hours
Renita’s license has been expired for more than one year. What must she do to reinstate it?
Apply for a brand new license.
(Licenses expired for less than one year may be reinstated. After that time, the former license holder will have to go through the entire application process again to be licensed.)
Which Tennessee real estate license requires that applicants have real estate experience?
- Acquisition agent
- Affiliate broker
- Broker
- Timeshare salesperson
- Broker
Donnie is the buyer’s agent for a transaction in which May (from a different brokerage) listed her seller client George’s property. From whom will Donnie receive his compensation?
From his own broker
Licensees may receive compensation for real estate services only through their broker.
Jim is a new licensee, and he’s excited to create some advertising. When he does this, what must he remember about including his firm name in his advertising?
The firm name and phone number must appear on all advertising.
What can a facilitator do for a customer?
- Advocate for the customer
- Negotiate an agreeable price
- Process paperwork
- Recommend specific contract terms
- Process paperwork
A principal broker can minimize the risk of liability that all members of the firm represent by ______.
- Employing fewer than 15 people
- Having all members of the firm sign a waiver absolving the principal broker of any responsibility for their actions
- Requiring all members of the firm to follow a standardized set of policies and procedures
- Working only with low-value properties
- Requiring all members of the firm to follow a standardized set of policies and procedures
Which component of a purchase offer could be referred to as a “down payment on the down payment”?
- Double down payment
- Earnest money
- Partial down payment
- Proceeds money
- Earnest money
At the end of successful real estate transaction, the earnest money is applied toward the buyer’s down payment.
What should a Tennessee broker do when receiving a post-dated check as earnest money?
Verify it’s not provided in the offer, and advise the buyer that postdated checks are not an acceptable for payment of trust money.
The commission uses an official seal, which is used to certify and authenticate ______.
Records
The seal adopted by the commission is used to certify and authenticate records so they are treated as originals.
What must all agreements and contracts have per the Tennessee Real Estate Commission?
Termination date
How old must you be in Tennessee to qualify as a timeshare salesperson?
At least 18
What kind of agency relationship enables two licensees in the same Tennessee brokerage to work with two parties in a transaction?
Designated agency
Which option describes the affiliate broker application process?
- Apply in writing on an approved form after turning 21, and include proof that the applicant is a state resident.
- Apply in writing on an approved form, submit a letter of course completion, and have a principal broker sign the application.
- Apply in writing on an approved form within six months of passing the affiliate broker exam and provide a certificate of completion of 120 hours of approved real estate instruction.
- Apply in writing on an approved form within three years of passing exam, and include place of business for which license is desired.
- Apply in writing on an approved form, submit a letter of course completion, and have a principal broker sign the application.
(Affiliate broker applicants apply in writing on an approved form, submit a letter of course completion, and have a principal broker sign their application.)
The Old People’s Senior Community caters to residents who are 55 and older. The community has 100 units. Thirteen units are occupied by adults who are between 45 and 55. Will this community qualify for a fair housing exemption under Tennessee’s Human Rights Act?
No, the exemption in Tennessee applies only when at least 90% of the units are occupied by residents who are at least 55 years old.
Which of the following best describes a net listing?
- The seller and agent agree to split the profit from the proceeds of the sale.
- The seller reserves the right to sell the property and not have to pay a commission.
- The seller specifies a price desired for the property and agrees to pay the broker any amount received that’s more than that price.
- The seller works with many agents, and only the agent who procures the buyer is owed a commission.
- The seller specifies a price desired for the property and agrees to pay the broker any amount received that’s more than that price.
Ted and Tanya, Tennessee buyers, are represented by Brooke Sales. They want to make an offer on a home and give Brooke a check for $5,000 for earnest money. The check is post-dated for a week. Ted explains, “We have the money, but I need to shuffle a few things around before this check is good.” Can Ted and Tanya do this?
No. Earnest money needs to be able to be deposited immediately, so a post-dated check won’t work.
Regarding protected class status, a Tennessee licensee should ______.
Understand what it means, but behave the same way with all clients and customers regardless of their protected class status
A Tennessee license expired more than 120 days but less than one year due to failure to comply will be subject to an additional penalty fee of ______ .
$100 per 30 day period
Which type of Tennessee property manager is most likely to work for real estate developers and investors?
Real estate development
Fortunado took 95 hours of approved education, and has his high school diploma. He can now sit for which exam?
Affiliate broker
Which of the following statements is true regarding timeshare estates in Tennessee?
- Timeshare estates are illegal.
- Timeshare estates can be sold or passed down to heirs.
- Timeshare estates cannot be passed down to heirs.
- Timeshare estates cannot be sold.
- Timeshare estates can be sold or passed down to heirs.
A Tennessee broker discloses to a potential buyer that she’s not only the listing agent, but also the owner of the property the buyer’s interested in. She makes this disclosure of personal interest because ______.
It’s required under Tennessee law
As a(n) ______ property manager, you know there’s a lot more turnover in your area of expertise.
Residential
Which of the following scenarios best describes an illegal net listing in Tennessee?
- Carmel is selling her condo for $280,000 and is offering 6% commission to the listing broker.
- Jason is listing his duplex for $400,000, but reserves the right to find his own buyer and not have to pay a listing commission.
- Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
- Ralph is selling his townhome for $225,000 and paying a brokerage fee of $25,000.
- Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
Woody wanted to work for the new broker in town, so he filed the paperwork necessary to affiliate with a new broker. What will happen to his three listings and two buyer clients?
They remain with Woody’s original broker, unless the broker agrees to other arrangements in writing.
Tennessee licensee Ken is so excited to get his first listing that he can hardly wait to get started marketing the property. The owners, Buck and Sally Henson, are coming in tomorrow morning to sign the listing agreement, but have already verbally given their consent to the agreement. Ken, whose motto is “No time like the present,” puts a for sale sign on the Hensons’ lawn. Which of the following is true of this situation?
- Although Ken should have waited until the listing agreement was signed, he can’t get into any trouble for this unless the Hensons decide not to sign the agreement.
- Because he has the couple’s verbal consent to represent them, Ken is acting within the law and his duties.
- It’s illegal for a licensee to place a for sale sign on a property without the owner’s written consent.
- It’s okay for Ken to put up the sign early, as long as he doesn’t start formally marketing the property until after the Hensons sign the agreement.
- It’s illegal for a licensee to place a for sale sign on a property without the owner’s written consent.
Ed just obtained his affiliate broker license. How long is the license valid?
Two years (Licenses in Tennessee are renewed every two years, with one exception: a broker’s original license, which expires in three years.)
In Tennessee, team advertising must include ______.
The brokerage name and telephone number
As part of her license renewal requirement, Tamsin must complete 16 hours of continuing education. What type of license does she hold?
Affiliate broker
When must written confirmation of agency status occur in Tennessee?
Prior to offer preparation
What should you document to avoid E&O claims?
Conversations and recommendations
Document recommendations, conversations, and any actions you’ve taken on your client’s behalf.
Your friend Ed tells you that he’s just entered into a designated agency relationship with his seller clients. What does this mean in Tennessee?
Ed’s broker appointed him to represent only the sellers in a transaction.
Someone in Tennessee who’s been given the authority to act on behalf of someone else is a(n) ______.
Agent
(The term “agent,” though often used to refer to a real estate licensee, means someone who’s been given the authority to act on someone else’s behalf in some capacity.)
Merrill is an affiliate broker at XYZ Realty whose client, Jim, has just closed on his house. On what will Merrill’s compensation be based?
His independent contractor agreement with his broker
What’s needed for proper recordkeeping?
A system
Gavin is a new licensee. He just met with his first potential client, Anita, who’s interested in buying a home. Anita has agreed to let Gavin represent her, but hasn’t signed an agency agreement. Which of the following is true?
- Anita will owe Gavin commission because of their verbal agreement.
- Because Anita hasn’t signed an agency agreement, she isn’t Gavin’s client.
- Gavin can collect a commission if he recorded their conversation.
- Gavin is not required by law to document the agency agreement.
- Because Anita hasn’t signed an agency agreement, she isn’t Gavin’s client.
Madge is a principal broker with a real estate firm in Tennessee that, until recently, routinely accepted trust funds such as earnest money deposits. The firm has recently applied for and received an escrow account waiver. How many years is Madge’s firm required to keep records of the escrow/trustee accounts it had prior to obtaining the waiver?
Three years
(Brokers must keep accurate escrow/trustee account records for at least three years. The records must indicate the date and from whom the funds were received, the date deposited, the date any withdrawals are made, and other necessary information.)
Which of the following documents are principal brokers required to retain under Tennessee law?
- Growth projection charts
- Transactional records
- Wage rate tables
- Work time schedules
- Transactional records
Which of the following would you need to disclose about a listed property?
- It was previously listed with another brokerage.
- You owned the property in the 1990s.
- Your stepfather is the property owner.
- You viewed the property as a potential buyer three months ago, but decided against it.
- Your stepfather is the property owner.
(If a licensee has an ownership interest in a given property, or a family or organizational connection to the property owner, this must be disclosed to parties to the transaction.)
What type of agency agreement creates a relationship between a buyer and a broker, including all of the broker’s affiliates?
Traditional buyer agency
Traditional buyer agency creates a relationship between a buyer and all of the affiliates in the brokerage.
Jennifer, a broker in Tennessee, plans to ask her assistant, Kate, to review transaction files and purge unnecessary ones. What should Jennifer tell Kate about this process?
- Anything that’s more than two years old can be destroyed.
- As long as the electronic record is deleted, hard copies can be thrown in the trash.
- Be sure to put the files in the locked trash bin in the alley.
- The documents identified for purging need to be destroyed properly using a high-quality shredder or by hiring a document-shredding company.
- The documents identified for purging need to be destroyed properly using a high-quality shredder or by hiring a document-shredding company.
Karen has to reapply for her Tennessee affiliate broker’s license. It’s June 20, and her license expires on August 7. What did she fail to do?
Submit her renewal paperwork 60 days prior to the deadline
TREC can hold as many meetings as it deems necessary throughout the year, but it must have a minimum of three meetings. Where must these meetings take place?
One in each of the divisions
A license that’s expired for more than ____ can’t be reinstated.
One year
What license status is needed to perform real estate services in Tennessee?
Active
What must licensees do to maintain their licenses?
Complete continuing education requirements and pay the renewal fee
Tennessee affiliate broker Bill obtained written acceptance of an offer to purchase real estate. Now he must within a reasonable time deliver true, legible copies of the purchase and sale contract, signed by the seller and the buyer, to ______.
Both the buyer and seller
(A licensee must furnish copies of brokerage agreements, offers, counter-offers, and all types of contracts to all parties at the time they sign.)
What’s the pre-licensing education requirement for affiliate brokers in Tennessee?
90 hours
Edward, a Tennessee principal broker, is going through transaction and contract files from one year ago. Which of the following statements is NOT true?
- Edward is legally required to keep most of the documents generated as part of a real estate transaction.
- Edward’s affiliate brokers are ultimately responsible for ensuring they comply with TREC’s document-handling rules.
- Keeping his paperwork organized is essential and helps manage risk.
- TREC may require Edward to make all of his books, accounts, and records available to a TREC auditor.
- Edward’s affiliate brokers are ultimately responsible for ensuring they comply with TREC’s document-handling rules.
(In Tennessee, principal brokers are responsible for ensuring that all affiliate licensees comply with TREC’s document handling rules. They must properly manage any and all paperwork associated with the transaction.)
What duty can a seller still expect from a licensee after the brokerage relationship terminates?
Confidentiality
Which of these transactions is exempt from the disclosure requirements of the Tennessee Residential Property Disclosure Act?
- A house listed for sale by a real estate licensee
- A house that is for sale by owner
- A newly constructed home
- A single-family residence
- A newly constructed home
A buyer client is suing Janet for an inadvertent mistake she made in a real estate transaction. What insurance policy covers this type of situation?
Errors and omissions insurance
When trust funds are deposited into an interest-bearing escrow account in Tennessee, what must first happen?
Consent and agreement on interest distribution from the parties
Cass is an affiliate broker. His principal broker is Paula. Which of the following is a true statement about the professional relationship between Cass and Paula?
- Cass isn’t allowed to work with clients alone during the period of his affiliation; Paula must accompany him to all closings.
- Cass is required to share part of the commission that clients pay him with Paula.
- Paula is responsible for Cass’s actions as a real estate agent.
- Paula must agree to supervise Cass for a three-year period.
- Paula is responsible for Cass’s actions as a real estate agent.
Which option describes the broker application process in Tennessee?
- Apply in writing on an approved form after turning 21, and include proof of state residency and successful exam completion.
- Apply in writing on an approved form, submit a letter of course completion, and have a principal broker sign the application.
- Apply in writing on an approved form within six months of passing the broker exam and provide a certificate of completion of 120 hours of approved real estate instruction.
- Apply in writing on an approved form within three years of passing the broker exam, and include contact information for the place of business for which the license is desired.
- Apply in writing on an approved form within six months of passing the broker exam and provide a certificate of completion of 120 hours of approved real estate instruction.
What is the minimum number of years that brokers in Tennessee must keep records of escrow/trustee accounts?
Three
TREC can’t be held legally responsible for damages if a consumer sues the commission. This gives TREC immunity from ______.
Civil liability
As a property manager for several residential landlords in Tennessee, Tomas must provide critical reports to each of the property owners for whom he works. Which of the following information points needs to be updated and issued monthly?
- Days late for tenant rental payments
- Fair market value of each property
- Income and expenses for each property
- Number of vacation days taken by property employees
- Income and expenses for each property
Susie’s a little nervous about the $20,000 earnest money check she just deposited with a Tennessee title company. When should she expect to see this money applied toward her purchase of the property?
When conditions are met at closing
Which of these statements about earnest money is true?
- A portion of earnest money goes to the seller’s agent as commission.
- Disbursal of earnest money depends on the terms of the contract.
- The buyer always gets the earnest money back if the contract falls through.
- The seller always retains the earnest money if the contract falls through.
- Disbursal of earnest money depends on the terms of the contract.
What’s another name for a facilitator?
Transaction broker
Thomas is applying for an affiliate broker license. What type of written examination requirement does this type of license have?
Thomas must pass the national and state exams with a score of 70% or greater.
(An applicant for an affiliate broker license must pass the national and state exams with a score of 70% or greater, after having successfully completed 90 hours of approved pre-licensing education.)
Dan and Alice just signed a listing agreement with their new agent, Jan. What type of agency exists between Jan and her clients?
Seller agency
Why do residential and commercial real estate purchases in Tennessee require different contracts?
To provide the proper legal protections to the parties involved.
Margo is a licensed affiliate broker who works under Tyler at ABC Realty in Kingsport. She decides to move to Crossville to help care for her mother. Margo has the opportunity to work with a broker in her new town, so she wants to transfer. What must Margo do to transfer her license?
Apply for a transfer of license and obtain a release from her current broker, notify the commission, and pay the fee before beginning work for the new broker.
What’s another name for an escrow account in Tennessee?
Trust account
A real estate licensee is assisting a buyer client with the purchase of a retail strip mall. What’s the appropriate Tennessee Association of REALTORS® (TAR) form for this licensee to use ?
CF 401 Commercial Purchase and Sale Agreement
(It’s essential to use the appropriate contract form. For a transaction involving retail space, the commercial version of the purchase and sale agreement, CF 401, is correct.)
Which of the following is a requirement of a principal broker who supervises licensees in Tennessee?
- The broker must be at least 30 years old.
- The broker must be available to affiliate licensees during normal working hours.
- The broker must complete at least three transactions each month.
- The broker must provide affiliate licensees with viable leads.
- The broker must be available to affiliate licensees during normal working hours.
Which act established the Tennessee Real Estate Commission?
Tennessee Real Estate Broker License Act
(The Tennessee Real Estate Broker License Act established rules for real estate professionals and the Tennessee Real Estate Commission.)
In Tennessee, what does having a designated agent help a brokerage to avoid?
In-house dual agency
Percy and Jackson have formed a team within their Gatlinburg real estate brokerage firm. They’re drafting up some advertisements to help launch their team. What do they need to keep in mind when designing their marketing materials?
Ads must include the team name and brokerage firm name.
Tennessee buyers may provide assurance they won’t back out of the sale by offering to deposit ______ money that will be kept in escrow until the conditions are met at closing.
Earnest
What’s the name for someone providing general assistance to a buyer and/or seller, but not serving as a legal representative?
Facilitator
Tim, a Tennessee licensee, is affiliated with principal broker Ashton. After a team meeting, Tim asked him “Why do we need to keep purchase documents and closing statements?” Ashton’s response should be ______.
“Tennessee law requires I keep records relating to any real estate transaction or else risk my license being revoked.”
What’s the minimum age requirement to qualify for an affiliate broker license?
18
Monica’s Tennessee real estate business is booming. She’s representing an owner who’s selling a $500,000 home on one side of town, and a buyer who’s purchasing a $300,000 property on the other side of town. As it happens, the seller and buyer both know each other from church, and have been talking to others about Monica’s talents, which has brought in several new leads for her to pursue. What type of agency relationship does Monica have with the seller and buyer?
She is each party’s agent.
In Tennessee, how long must electronic real estate forms be kept with the broker?
Three years
Leon and Beth own 1/13 of a timeshare estate in Tennessee. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?
Fee simple
(Timeshare estates are owned as fee simple estates. They convey all rights of ownership and can be sold or passed down to heirs.)
Which of these must Tennessee licensees disclose relative to specific real estate transactions handled by their brokerages?
Immediate family relationships
The protected classes under Tennessee’s fair housing law are ______.
Race, color, religion, national origin, creed, sex, familial status, and disability
Serena is a buyer who hasn’t signed a representation agreement with any licensee. Before Howard, a sales agent, shows Serena a property for sale, Howard discloses that since he and Serena don’t have an agency agreement, he represents the seller. Howard then proceeds to show Serena several properties listed by his brokerage. Who’s Howard’s client?
The seller
(Absent an agency agreement with Serena, Howard technically represents the seller of any property he shows her. As long as he’s clear about that, he can work with her as a customer.)
Two members of the Tennessee Real Estate Commission, Barb and Jeff, represent the public at large. Besides not being real estate licensees, what else do we know about Barb and Jeff?
They don’t live in the same part of the state.
The two public members may not be from the same Grand Division.
Sabine is a Tennessee broker who will be working independently for the first time since starting her real estate practice 11 years ago. She converted a garage behind her house to her office. What does Tennessee law require her to put up outside her office?
A sign stating that her business is a real estate brokerage
When a real estate affiliate broker license is issued in Tennessee, how long is it valid?
Two years
Margot is pursuing her Tennessee real estate salesperson license, but only her grandmother calls her Margot. She’d instead like to advertise and be licensed under her nickname, Peggy. Which statement best describes how she can do this?
- Licenses are only issued under a person’s legal first name. Her license and advertisements must use the name Margot.
- She can advertise using the name Peggy, but her license will be issued using the name Margot.
- She must include her nickname on her salesperson license application in order to advertise using her nickname.
- She needs to legally change her first name in order to be licensed as Peggy.
- She must include her nickname on her salesperson license application in order to advertise using her nickname.
(Licensees wanting to advertise using a nickname instead of their first name must include their nickname on their initial license and renewal applications.)
What needs to happen before a Tennessee licensee can legally offer gifts or prizes for the inducement of real estate sales or purchases?
The licensee must obtain the principal broker’s approval.
Emma is ready to submit her renewal paperwork and fees to the commission. To avoid paying any extra fees, she must do this ___ days prior to her expiration date.
60
To avoid dual agency, what would Tennessee brokerage firms most likely do?
Default to facilitator status.
Who or what entity must keep records of all funds deposited into the custodial or trust account that indicate the date and from whom the broker received the funds, the date deposited, the date any withdrawals are made, and other necessary information?
The broker
In a commercial purchase and sale agreement, the ____________ paragraph describes the buyer’s due diligence period.
Inspection
Shannon just helped Linda sell her property. When agency between Shannon and Linda terminates, can Shannon disclose confidential information that Shannon learned while Linda was a client?
No, because an agent’s duty of confidentiality never ends.
Who’s entitled to reimbursement from the Real Estate Education and Recovery Account?
A member of the public who’s been granted a judgment against a licensee
Which of the following is a true statement about transactional recordkeeping requirements in Tennessee?
- Electronic recordkeeping isn’t allowed.
- Hard copies must be kept for three years, electronic records for two years.
- Hard copy recordkeeping is preferred.
- Licensees must produce records within 24 hours of a TREC request.
- Licensees must produce records within 24 hours of a TREC request.
What’s the term length for a member of the Tennessee Real Estate Commission?
Five years
______ directly supervises all of the brokerage’s company and team advertising .
The principal broker
What’s the only way to create an agency relationship in Tennessee?
Bilateral written agreement
All funds entrusted to a Tennessee licensee on behalf of another party in the practice of real estate are by definition ______.
Trust funds
Which of the following items is found in a residential purchase and sale agreement but not in a commercial purchase and sale agreement?
- Buyer due diligence responsibilities
- Legal description of the property
- Purchase price for the property
- Seller responsibilities regarding disclosures about property condition
- Seller responsibilities regarding disclosures about property condition
What’s one benefit to affiliating with a broker?
- Increased liability
- Lack of administrative support
- Split commission with the broker
- Training
- Training
Which of these statements about using social media for real estate advertising in Tennessee is true?
- Advertising on social media requires the same attention to detail and the same type of information as other advertising methods.
- Most brokerage firms prohibit social media advertising because it’s not possible to provide required information.
- Social media posts on a licensee’s personal page or account aren’t subject to Tennessee’s licensing laws and code of ethics.
- Social media posts that don’t include specific property information aren’t subject to Tennessee’s licensing laws and code of ethics.
- Advertising on social media requires the same attention to detail and the same type of information as other advertising methods.
Brokerage documents that the Tennessee Real Estate Commission requests must be produced within ______ of the request.
24 hours
Who may legally receive direct compensation from clients for real estate activities in Tennessee?
A real estate broker only
Tamara is assisting a buyer who’s making an offer on her client’s listing. Tamara and the buyer develop a good rapport, and in her desire to be helpful, Tamara offers the buyer advice about how to structure her offer. What does Tamara risk being charged with?
Undisclosed dual agency
Which of the following is true about complainants in the TREC complaint process?
- They may be licensees or consumers.
- They must be brokers.
- They must be licensed.
- They must not be licensed.
- They may be licensees or consumers.
Tennessee licensee Doug wants to advertise another broker’s listing. Whose permission must he have to do this?
The property owner
In Tennessee, what’s the maximum civil penalty that can be imposed for a single occurrence of a license law violation?
$1,000
What’s true about a licensee’s seat on the local park commission’s board of trustees?
The seat must be disclosed if the organization buys or sells property through the licensee’s brokerage.
What should you do if your sellers ask you to complete their disclosure forms?
Remind them that sellers must complete the disclosures
Where on a Tennessee licensee’s website must required information be found?
On every page
The members of TREC select a/n ______ and ______ of the commission.
Chairperson, vice chairperson
How often can real estate firms receive an escrow waiver?
Once each license renewal period
Real estate firms can only receive an escrow waiver once each license renewal period.
What’s true about licensee commission in Tennessee?
- Although there’s no standard rate, there is a standard listing range that brokerages must abide by.
- It may be paid directly to the licensee, with the client’s approval.
- It’s subject to a brokerage split.
- It’s subject to a standard commission rate.
- It’s subject to a brokerage split.
If a Tennessee affiliate broker wants to offer a prize to clients, what must the principal broker do?
Approve the prize.
Which of the following situations is outside of the Tennessee Real Estate Commission’s jurisdiction?
- Client Hayden says he has proof that his appraiser and broker are colluding to keep prices high.
- Evelyn tried to buy a timeshare but claims that timeshare broker Kenneth promised her three weeks and she only got two.
- Kathi just bought a house and claims that her credit union promised her one interest rate but gave her a higher one.
- Real estate investor Cyril says that he hired a man named Porter as his real estate broker, but Porter is not licensed.
- Kathi just bought a house and claims that her credit union promised her one interest rate but gave her a higher one.
How can a consumer submit a complaint to the Tennessee Real Estate Commission?
Using an online form
Which of the following is true about a Tennessee broker’s license if a broker’s affiliated licensee commits a violation?
- It’s automatically revoked.
- It’s automatically suspended.
- It’s in jeopardy if it can be shown the broker failed to supervise the licensee.
- It’s protected unless the broker had foreknowledge.
- It’s in jeopardy if it can be shown the broker failed to supervise the licensee.
Which of the following is a true statement regarding a listing agent’s compensation in Tennessee?
- It’s typically based on the amount of time that the listing agent put into marketing the property and closing the transaction.
- The amount of compensation will likely depend on the sales price and the licensee’s independent contractor agreement with the brokerage.
- The listing agent is paid directly by the buyer.
- The listing agent receives a standard 3% of the sales price.
- The amount of compensation will likely depend on the sales price and the licensee’s independent contractor agreement with the brokerage.
Raymond wants to comply with Tennessee law, so he always retains records related to a transaction for at least _____.
Three years
A principal broker in Tennessee is required to ______ for all transactions in which affiliated licensees participate.
Review and approve transactional documents and agreements
TREC has just asked Newman for his transactional records. Newman stores these records online. He must be able to produce them for TREC’s auditor within ______.
24 hours
Leo’s client is looking for a property in Memphis with at least 2,500 finished square feet. He finds a 2,200-square-foot property with all the other features the client is looking for and purposely fails to mention the square footage. His client agrees to look at the property, falls in love with it, and wants to make an offer. Which of these statements accurately represents Leo’s level of misrepresentation in this situation?
- Because Leo didn’t state the square footage, he’s not guilty of misrepresentation.
- It’s the buyer’s responsibility to ensure that the property has the proper square footage, so Leo’s in the clear.
- Leo obviously knew about the square footage and intentionally didn’t mention it. He’s guilty of intentional misrepresentation.
- Leo omitted a material fact. This is considered unintentional misrepresentation.
- Leo obviously knew about the square footage and intentionally didn’t mention it. He’s guilty of intentional misrepresentation.
How many TREC members must be present in order for the commission meetings to be valid?
5
What’s the primary difference between an ordinary and a pur autre vie life estate?
An ordinary life estate ends with the death of the estate holder; a pur autre vie life estate ends with the death of someone other than the life estate holder.
(An ordinary life estate ends when the estate holder dies. A pur autre vie life estate ends when a named person other than the estate holder dies.)
When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: “Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet.” In this description, what does “north for 314 feet” represent?
A mete
Metes (measures) are the direction and distance of a line forming the boundary of the property.
Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice’s needs?
Exclusive agency (It’s easy to confuse exclusive agency and exclusive right to sell. With exclusive agency, the seller retains the right to find a buyer and avoid paying the commission, but the seller's listing will likely receive more attention from the agent than it would with an open listing.)
Which of these is an example of blockbusting?
- A lender withholds mortgage loans in areas considered demographically risky.
- A licensee doesn’t tell her buyer client about a first-floor condo because she felt it wasn’t safe for the client.
- A licensee focuses on showing properties in areas that are demographically similar to her buyer clients’ ethnicity.
- A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she’ll never be able to sell.
- A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she’ll never be able to sell.
Frieda is practicing dual agency and neither party seems to mind, even though she didn’t obtain written informed consent. Is this legal?
No. Without informed consent, it’s illegal.
Warren signed a contract with the Samsons for the sale of property he didn’t own. What type of contract is this?
Void
Sima purchased a cooperative. When the sale goes through, what will she own?
Shares in a corporation
Which of the following is a common chimney or fireplace problem?
- Creosote
- Damage around the fascia
- Holes in the soffit
- None of these
- Creosote
Lyle is a developer who placed a number of restrictions on the Happy Valley subdivision when he built it in 2003. Sara bought a home in Happy Valley in 2009 and was surprised to learn that storage sheds weren’t allowed. Now Sara has noticed that sheds are popping up here and there throughout the neighborhood, and she puts up a shed of her own feeling no concern about a penalty. Which of the following is most likely to be true?
- Lyle set up the restriction to expire after a certain number of years.
- The homeowners have all applied for waivers to the existing restrictive covenant.
- The homeowners so desperately need storage that they’re willing to face fines or legal action.
- The sheds are made of a new material that hadn’t been invented or prohibited in 2003.
- Lyle set up the restriction to expire after a certain number of years.
Terri just bought her first home! She’s so excited to be living the American Dream. She owns her home’s interior, including the walls, but not the land on which it sits. What type of home does Terri own?
Condominium
The lender will charge a one-and-a-half-point origination fee and two loan discount points. What will be the total due for points on a $115,000 loan?
$4,025
Your buyer client, Christine, asks you when she’ll have to pay the transfer tax. What do you tell her?
She’ll pay it at closing.
It’s January, and the pool at Roger’s listing has been prepped for winter for several weeks. The homeowner assures Roger that it’s in good working order. Roger has no reason to disbelieve the homeowner, so he tells prospective buyers that the pool is fine. The property sells, spring comes, and the new owners call to complain that the pump doesn’t work, and the pool drain appears to be clogged. What did Roger commit?
Unintentional misrepresentation
Which of the following statements about independent contractors and taxes is true?
- Brokers don’t withhold income or Social Security taxes for independent contractors.
- Brokers withhold income and Social Security taxes for independent contractors.
- Independent contractors don’t pay income tax or Social Security tax.
- The IRS doesn’t tax independent contractors.
- Brokers don’t withhold income or Social Security taxes for independent contractors.
Nellie and Victor own a suburban ranch home and fell behind on paying their property taxes when Victor lost his job last year. Victor is working again, but they still haven’t saved enough to pay their back taxes. They’re worried that the county may begin foreclosure proceedings. What type of lien is this?
Specific
Property tax liens are specific, because they represent a lien against a specific piece of property.
A former client has filed a formal complaint against Ajit, claiming he failed to properly disclose a material fact that the seller didn’t disclose. Which of these statements about Ajit’s liability is true?
- Ajit is only responsible for disclosing adverse material facts.
- Ajit may be liable if he operates in a state that requires licensees to make a reasonable effort to discover adverse material facts.
- The claim has no base because the seller didn’t disclose the information.
- The claim is likely to be dismissed if Ajit operates in a non-full disclosure state.
- Ajit may be liable if he operates in a state that requires licensees to make a reasonable effort to discover adverse material facts.
In which of these situations is Ronna’s fiduciary duty of reasonable skill and care at odds with her duty of obedience?
- Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
- Ronna’s buyer client asked her to keep his financial situation confidential.
- Ted, Ronna’s broker, insisted that she teach a contracts class, even though she’s a new agent.
- Though her customer was adamant, Ronna turned down a commercial listing because it was outside her area of expertise.
- Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid?
Yes, the contract is valid.
(While legal capacity includes whether or not all parties are of legal age, contracts signed by minors are valid but voidable by the minor.)
Using the capitalization formula, what is the value if the net operating income is $20,000 and the rate of capitalization is 10%?
$200,000
Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.
License
(A license is permission to do something on another’s land without actually possessing any interest or ownership in the land.)
Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?
$105,263.16
Vicky and Lee vacation in Cancun, Mexico, every year. They purchased the right to stay in a beach condo for the first two weeks in May, and their agreement continues for the next 10 years. They don’t actually own the unit. What did they purchase?
Timeshare use
Which amendment to CERCLA says that “innocent landowners” aren’t responsible for clean-up of hazardous contamination?
Superfunds Amendments and Reauthorization Act
(The Superfund Amendments and Reauthorization Act, or SARA, says that innocent landowners aren’t responsible for clean-up of hazardous contamination.)
How’s interest defined as it’s related to a mortgage loan payment?
A fee paid to lenders for the use of their money
The appraisal on Jean’s property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?
Amendment
(A change to an existing sales contract is called an amendment, which changes one or more of the contract’s original terms.)
Janice is extremely excited to have purchased her first home. She was able to lock in her monthly payment at a very low rate for the first five years. In year six, Janice’s payments will become significantly larger based on the going market rates. What type of loan does Janice have?
Adjustable rate mortgage
Rennie owns a 240-foot by 130-foot lot. How do you calculate the perimeter?
Add two times the length to two times the width.
Agency may be legally terminated in which of the following ways?
- The agent finds a better client.
- The client changes financing.
- The client changes plans.
- The principal broker becomes incapacitated.
- The principal broker becomes incapacitated.
Lena’s buyer Mindy is making an offer on Leo’s house. Which party decides how much earnest money to offer?
Mindy
Tres owns a warehouse in an area that is zoned light industrial. With an increased demand for housing in the area, Tres wants to create loft-style condos and have his property designated as residential, even though the surrounding buildings will remain light industrial. What type of zoning is this?
Spot zoning
Shirley’s lender discharged the mortgage lien on Shirley’s property after processing her final payment. Which clause requires the lender to take this action?
Defeasance
(The defeasance clause means the lender may not pursue the borrower for additional funds when the loan balance is paid in full.)
Alluvion describes new deposits of land that are the result of what natural process?
Accretion
Two essential elements of a deed are the ______.
Signature of the grantor and the habendum clause
(Only the grantor’s signature is required, not the grantee’s. The habendum clause is required only if the deed is conveying less than a fee simple estate.)
An exclusive right-to-sell agreement must include ______.
A start and end date for the listing period
Lauren obtained a loan that’s insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?
FHA
Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have?
Fee simple determinable
(A fee simple determinable has limitations as to what can or can’t be done with a property. It uses phrases such as “so long as,” “while,” or “during” to describe the required condition.)
Which of the following properties requires a lead disclosure?
- Commercial building built in 1960
- Duplex built in 1959
- Duplex built in 1979
- Single-family home built in 1999
- Duplex built in 1959
In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?
Comparables
(When sizing up the competition to the subject in the marketplace, comparable properties must be selected and compared both qualitatively and quantitatively.)
Jordan works as a property manager for several residential property owners. When she receives security deposits from tenants, how long does she have to deposit them into an escrow account?
It depends on her state’s requirements.
(Trust funds, which include security deposits, must be deposited within the length of time outlined in each state’s laws and regulations. This is typically one, two, or three business days from receipt, but may be longer in some cases.)
Local authorities lack police power over which of the following?
- Budgeting
- Federal government construction projects
- Subdivision development
- Zoning
- Federal government construction projects
Nate represents Elena in the purchase of a house. Katherine represents the seller, Timothy. Which of the following statements accurately reflects the agency duties owed?
- Each licensee owes all fiduciary duties to both clients.
- Katherine owes Elena the duty of loyalty.
- Nate owes no duties to Timothy, and Katherine owes no duties to Elena.
- Nate owes Timothy the duty of disclosure.
- Nate owes Timothy the duty of disclosure.
(A licensee owes all parties the duty of disclosing material facts, as well as honesty, fairness, and accounting. Only a client would be owed obedience, loyalty, and confidentiality.)
Which of the following wouldn’t need to be disclosed by the listing agent who noticed it when selling a home?
- A garage added on to the home without a permit
- A kitchen cabinet that was installed at a slight angle
- Electrical wiring done “on the cheap” and not to code
- Water damage in the floor from a recent flood in the basement
- A kitchen cabinet that was installed at a slight angle
Phyllis bought a beach townhouse for $475,000 and put down $50,000 in earnest money. At closing, she paid $150,000, the balance of her intended down payment. The mortgage tax in the area is $.35 per $100 (or portion thereof). Calculate what Phyllis will pay for the mortgage tax.
$962.50
(A mortgage recording tax is based on the loan amount. Phyllis will pay a mortgage tax amount of $962.50 on her loan amount ($275,000 x .0035).)
Which of these situations addresses the fiduciary duty of confidentiality?
- Jeanette, a seller’s agent, tells the buyer’s agent that her client must sell his home because of an illness.
- Mark discloses the commission split he receives from his broker to a colleague at another firm.
- Regina tells her seller client that he’s required to disclose the roof damage.
- Todd’s lender shares Todd’s financial information with the loan underwriter.
- Jeanette, a seller’s agent, tells the buyer’s agent that her client must sell his home because of an illness.
(The fiduciary duty of confidentiality prohibits licensees from disclosing confidential information about a client, even after the agency relationship ends.)
Morris needs to pay for some repairs made to one of the units in his apartment complex. Which bank account should he use?
The firm’s operating account
Which of these was enacted to give electronic signatures, records, and contracts legal recognition equal to that of paper records and signatures?
- Federal Real Estate License Act
- Statute of frauds
- Statute of limitations
- Uniform Electronic Transactions Act
- Uniform Electronic Transactions Act
Allentown sits on the river, and its many bridges need repair. Which police power is Allentown likely to use in order to fund improvements to its bridges?
Taxation
(The purpose of taxation is to meet the need for public works by funding them through a stable source of income that allows many to share the burden.)
Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the implied agreement with Carly. What are Leigh Ann’s options for accepting an agency relationship after the fact?
Prepare an agency agreement or continue to assist Carly with the purchase.
Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What’s the maximum number of adjustments Steve should make to the Joneses’ property?
Zero
(Steve won’t adjust the subject property. Only the comparable sales price is adjusted. If it is inferior, adjust upward. If it’s superior, adjust downward.)
Katherine is purchasing a second home as an investment/vacation property. She has a large down payment, and the seller is financing the rest of the purchase. Which of these statements is true?
- The CFPB provides forms similar to the Closing Disclosure and Loan Estimate for seller/financers to use.
- The Closing Disclosure and Loan Estimate aren’t required in a seller-financed transaction.
- The seller is required to provide the same disclosure forms to Katherine as a standard lender would provide.
- The seller will provide the Closing Disclosure and Loan Estimate to Katherine but has a longer timeframe to do so than a traditional lender would have.
- The Closing Disclosure and Loan Estimate aren’t required in a seller-financed transaction.
(In a seller-financed transaction, the Closing Disclosure and Loan Estimate aren’t required. Some other form of statement may be prepared to show the buyer and the seller their respective closing figures.)
Adams County implemented a 10 p.m. curfew for youths under age 18 because of the high number of fights that have been occurring late at night in public places. Which of the following gives Adams County the right to restrict the movements of its minor citizens?
- Doctrine of laches
- Municipal master plan
- Police power
- Power of escheat
- Police power
Which factor that influences value considers the property’s function?
- Demand
- Scarcity
- Transferability
- Utility
- Utility
Sam entered into a contract to sell his home to Gina. After the inspection, Gina insisted that Sam replace the damaged roof. Sam refused, and the parties agreed to cancel the deal. This is an example of ______.
Mutually rescinding the contract
_______ says that value is created and maintained when the characteristics of a property fit in with its surroundings.
Conformity
Why does the closing agent review the purchase contract?
To gather closing-related information agreed to in the contract
(The closing agent uses the purchase contract to be sure that the closing process and prorations follow the parties’ wishes as agreed to in the contract.)
Which physical characteristic of land addresses the concept that land isn’t interchangeable and one piece of land isn’t exactly like another?
Uniqueness
What does the Federal Trade Commission consider to be an unfair ad?
Any ad or business practice that causes or is likely to cause injury
(Any ad or business practice that causes or is likely to cause injury is considered an unfair ad, according to the FTC’s Unfairness Policy Statement.)
When Gillian looked at the legal description of the property she was interested in purchasing, she read the following: “Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet.” In this description, what does “Beginning at the corner of State Route 61 and Hallowell Road” represent?
Bounds
(Bounds are physical features that define the boundaries of the property. Combined with directions and distances (metes), these form the basis of a metes and bounds legal description.)
Sylvia, who’s 15 years old, and her neighbor Marge, who’s 24, agree that Sylvia will babysit Marge’s toddler for the summer for $10 an hour. What type of contract is this?
Voidable
(A voidable contract appears to be valid, but one or both parties have the right to rescind the contract. In this case Sylvia can enforce the contract against Marge but Marge cannot enforce against Sylvia.)
Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing the home with Stella’s nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?
Tenancy in common
(This is a form of shared ownership, but only tenancy in common provides for inheritability—the other forms share the rights of survivorship (the existing tenants assume the deceased’s share of the property).)
A buyer has a 30-year, $750,000 loan with a 5.75% interest rate. How much of the first monthly payment is interest?
$3,593.75
Your clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?
$2,400
What does a balloon payment represent at the end of a loan term?
It means that some principal remains at the end of the loan term.
(A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.)
What is TRID?
TILA-RESPA Integrated Disclosures
The question, “What’s the purpose of this appraisal?” can be answered by this first step of the appraisal process.
State the problem.
(The first step is to state the problem so the appraiser can identify what data is needed. After that, the appraiser will identify the data needed, gather it, and analyze it.)
Zhe is appraising a property for Teamworks Lending. Which of these factors makes this a federally related transaction?
- It’s a conventional loan that Teamworks will sell to Fannie Mae.
- Teamworks will hold the loan in its local loan portfolio.
- The borrower is a U.S. Marine Corps veteran.
- The loan amount is more than $250,000.
- Teamworks will hold the loan in its local loan portfolio.
Teamworks will hold this federally-related transaction in its loan portfolio.
Emma is interested in purchasing a property with a big fenced backyard, because her eventual goal is to open an in-home daycare. Which of the following is a zoning issue that you would encourage her to research?
- How many children she’ll legally be able to watch per state guidelines.
- The kind of fence that is required for daycare playgrounds.
- Whether or not current regulations permit home-based businesses.
- Whether she’ll need to provide a business plan to lenders for a small business loan.
- Whether or not current regulations permit home-based businesses.
“I understand why you want a buyer representation agreement,” your buyer tells you. “But what’s in it for me?” You answer:
“Without it, you are unrepresented.”
(Without a buyer representation agreement, a buyer is unrepresented. This means the buyer won’t receive all the fiduciary duties of a client, just those due to a customer.)
Picture a drawing of a section of land. Where is Township 16 located?
Third row, third from left
Townships in a section are numbered beginning in the upper right (NE) corner and continue in a zigzag pattern.
You’re a new licensee who’s thrilled to be working with five different buyer clients. Under what circumstances is it appropriate for you to determine the earnest money amount for your clients?
- If the buyer is a first-time buyer.
- If the buyer is elderly.
- In none of these circumstances.
- When the buyer’s target is a second home.
- In none of these circumstances.
What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?
Elements and units
(There are two categories of comparison: elements, which look at physical and locational characteristics, and units, which look at the numbers.)
Which type of agent is an escrow officer?
Limited agent
Shari’s clients want her to post that there are “no showings on weekends” on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______.
Obedience
Your client, a builder, is considering buying three adjacent lots. They each have the same depth, 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?
446 feet
What is an encumbrance?
A defect on a title that can be monetary or physical
Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don’t have the best credit score. They’ve decided to buy the home using an FHA loan. Which of these is a true statement?
- A minimum down payment of 3.5% is required.
- Mortgage insurance is not required.
- The loan-to-value ratio must be less than 80%.
- They must have PMI.
- A minimum down payment of 3.5% is required.
Which of these situations represents the illegal practice of redlining?
- Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values.
- Eunice refuses to allow her agent to show her house to families with children.
- Hunter, a mortgage broker, refuses to underwrite mortgage applications from applicants who are buying in specific neighborhoods.
- Jaime is working with Korean clients. He’s focusing on homes in Korean communities because he thinks his clients will be more comfortable there.
- Hunter, a mortgage broker, refuses to underwrite mortgage applications from applicants who are buying in specific neighborhoods.
(Redlining is the practice of selecting geographical areas in which no mortgage loans will be written (based on demographics instead of creditworthiness).)
Rohit bought 31 acres of undeveloped and mostly forested land. He is planning a weekend with friends where they’ll camp on the property while scouting good locations to place a cabin. Which right in the bundle of rights allows Rohit to do the camping weekend on undeveloped land?
Possession
Ramon and Bill are victims of fair housing discrimination. Which of the following must have occurred if their landlord violated specific terms of the Fair Housing Act?
- They were refused an apartment because Ramon is from Nicaragua.
- They were refused an apartment because they’re gay.
- They were refused housing because Bill is a smoker.
- They were shown an inferior apartment because the landlord doesn’t like 20-somethings.
- They were refused an apartment because Ramon is from Nicaragua.
Your buyer Clint loves older homes and wants to make an offer on a beautiful Craftsman. He doesn’t like the yellow brick and has plans to paint it a lovely Williamsburg blue. You tell him that he may not be able to change the color or, even if he can, he may have to get the color approved first. What did you see on the property disclosure form that hinted at this?
The house is in a historic preservation district.
Walt and Ginger were informed by their landlord that their option to purchase the bungalow they’re renting has just been terminated. Which of the following things that can occur is likely to terminate an option to purchase?
- Ginger put up new curtains.
- They sublet the bungalow for a month without permission.
- They went on vacation and left the house empty for 12 days.
- Walt lost his job.
- They sublet the bungalow for a month without permission.
Which type of deed conveys real property from a decedent’s estate to a buyer?
Executor’s deed
Zach wants to purchase a property that’s subject to an existing lease agreement, which includes the tenant’s right to renew the lease. What is Zach’s obligation, if any, to uphold the terms of the lease agreement?
Zach must honor that right and allow the tenant to renew at the end of the term.
The Baxters are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them?
Conventional
Marge works for Morgan Realty as a transaction coordinator. Which of these factors may cause the IRS to classify an Marge as an employee?
- Marge is required to belong to the local REALTORS® association.
- Marge works the hours she chooses.
- The firm doesn’t provide any benefits to Marge.
- The firm pays Marge a salary.
- The firm pays Marge a salary.
Which option is of the most concern to licensees and advertising when it comes to the Federal Trade Commission?
- Excessive advertising costs
- Location of ads
- Misleading ads
- Paper waste
- Misleading ads
What might the government do if property owners fail to pay taxes on their property?
Place a lien on the property.
How are fines assessed for violations of the CAN-SPAM Act?
Per violation, which can be a single email
Solicitors may be charged over $40,000 for every email they send that violates the CAN-SPAM Act.
Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it’s going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the title to the land. What kind of state does Sondra live in?
A lien theory state
(In a lien theory state, the mortgage becomes a lien on the property, but title remains with the buyer. Foreclosure proceedings in a lien theory state may be more difficult for the lender.)
What’s it called when all parties sign a contract, but before the seller’s acceptance is delivered to the buyer?
Acceptance
(Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.)
Which of the following best describes the purpose of a sales contract?
- To identify the buyer’s agent/buyer agency relationship’s terms
- To identify the landlord/tenant relationship’s terms
- To identify the listing agent/buyer agency relationship’s terms
- To identify the terms of a real estate sales transaction between the seller and the buyer
- To identify the terms of a real estate sales transaction between the seller and the buyer
Sophie received title to her grandmother’s farm last spring. For almost 100 years, Sophie’s family has kept cows and goats on the 120-acre property. The deed came with a caveat: Sophie is never to raise pigs on the farm. If she does, then the property is transferred to her brother. What did Sophie’s grandmother create?
Condition
Marilyn is reviewing the inspection report with her buyer clients. Which of the following issues in the report should Marilyn flag as most significant?
- Broken dishwasher
- Lack of deadbolts
- Non-working sump pump
- Presence of mold
- Presence of mold
Joaquin sold his house for $327,600. He bought it several years ago for $139,900 with a $100,000 loan. The loan balance when he sold it was $73,400. What was Joaquin’s equity?
$254,200
Which of these tasks is a licensee required to perform based on her fiduciary duties?
- Indemnify her seller client from damages from failing to disclose a material defect.
- Provide advice to her clients regarding how to take title to their property.
- Reimburse her state’s recovery fund for damages paid out on her behalf.
- Tell parties to the transaction that she’s a licensee when she’s buying a property for herself.
- Tell parties to the transaction that she’s a licensee when she’s buying a property for herself.
Stu’s seller client, Gabi, wants to figure out how much equity she has in the home she’s selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have?
$105,000
Gary’s new seller client is concerned about privacy and doesn’t want her listing posted on the MLS. Gary explains to her the potential impact this will have on marketing her property, but the client remains adamant. Gary doesn’t list the property on the MLS. What fiduciary duty is at play?
The duty of obedience
Georgina is an escrow agent who’s holding funds for several transactions. Which of these statements about how she’ll disburse these funds is true?
- If the transaction closes, Georgina will disburse the earnest money to the listing broker as part of his commission.
- If the transaction closes, she’ll refund the earnest money to the buyer, since the buyer brings the full amount necessary for the down payment and loan costs to closing.
- If the transaction doesn’t close, Georgina will disburse the earnest money as instructed by the parties or according to state law.
- If the transaction doesn’t close, Georgina will refund the earnest money to the buyer.
- If the transaction doesn’t close, Georgina will disburse the earnest money as instructed by the parties or according to state law.
A seller wants to net $10,000 after the broker’s commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?
$276,596
Phoebe is careful to never act outside of her scope of expertise. She’s a real estate professional and proud of it, so when asked for advice about legal matters, inspection results, flaws in construction, or shoddy building materials, she always refers them to a professional in that field. Which duty is Phoebe demonstrating?
The duty of reasonable skill and care
Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?
$345,103
(The formula for finding net operating income is: gross income – operating expenses = net operating income. So, $674,232 – $329,129 = $345,103. Other expenses like loan interest and debt repayment aren’t included in this calculation.)
Which of the following statements is true regarding timeshare estates?
- Timeshare estates are illegal.
- Timeshare estates can be sold or passed down to heirs.
- Timeshare estates cannot be passed down to heirs.
- Timeshare estates cannot be sold.
- Timeshare estates can be sold or passed down to heirs.
Kyle owns six acres of land with 400 feet of river frontage. He wants to build a beach along the river bank to make it easier to swim in the river. He can do this because as the owner of river frontage, he has ________ rights.
Riparian
Which of these is excluded on a title insurance policy on Martha’s property because of the schedule of exceptions?
- A mechanic’s lien recorded by A1 Siding and Windows
- A verbal lease agreement Martha has with her neighbor who leases Martha’s garage
- Last year’s unpaid property taxes
- The current year’s unpaid property taxes
- A verbal lease agreement Martha has with her neighbor who leases Martha’s garage
Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase?
$208,000
Lynette purchased a property under a bargain and sale deed. Which statement best describes the covenants Lynette’s deed provides?
- A bargain and sale deed does not come with any covenants of warranty.
- A bargain and sale deed may come with or without covenants of warranty.
- A bargain and sale deed provides the same covenants as a general warranty deed.
- The bargain and sale deed includes all covenants except the covenant of warranty.
- A bargain and sale deed may come with or without covenants of warranty.
Callum is working with Darby, who received an honorable discharge from the Air Force. Callum is preparing to discuss options for down payment assistance with Darby. Which of the following would be Callum’s best resource for information for this specific client?
- Department of Human Services
- Department of Veterans Affairs
- Real Estate Assessment Center
- USDA Rural Development Program
- Department of Veterans Affairs
Sebastian owns a country house and vacations there every summer and on holiday weekends. As much as he’d like to will it to his niece when he passes, his ownership of the house ends when he dies. What type of estate does Sebastian own?
Life estate
Ann Marie is a tenant with a triple net lease. Per her lease, she pays for which of the following expenses related to the property?
Taxes, maintenance, insurance
(When you hear the term “triple net,” think of three. There are three letters in the acronym TIM, which stands for taxes, insurance, maintenance.)
Ken signed a contract to purchase Debra’s condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken’s birthday. What was the status of the contract when Ken and Debra entered into it?
Voidable
According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to set contract terms for a certain length of time?
Price fixing
Carla Ricardo has been offered her dream job in another state. She asks her current landlord to let her out of her lease early. The landlord agrees to do so, with no strings attached. Carla and her landlord have decided to terminate the contract through ______.
Mutual agreement
Victor buys a property from Yolanda for $200,000. Using a land contract, Victor agrees to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title?
Yolanda
Rex needs to handle some money he acquired during an “unsavory” business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?
Void
Charlene shares one wall with her neighbors to the side, but her home has three levels and she has no upstairs or downstairs neighbors nor a neighbor on the other side. What type of dwelling does Charlene own?
Townhome
Juan has finalized his comparables and is ready to determine a property’s appraised value. How does he do this?
He reviews his process and places more weight on the most similar comparables that he believes to be the most valid.
Chris is in the process of purchasing a property with 20 acres of farmland in a rural area of the state. Assuming his income meets the criteria of the program, what type of loan may Chris find the most desirable?
Rural development loan
Which of the following could indicate a problem with the chimney flue or ventilation?
- Damage around the fascia
- Doors that won’t open
- Drafts near the fireplace
- Holes in the soffit
- Drafts near the fireplace
Janine, a professional home inspector, notices a lot of small holes burrowed in a home’s attic beams. This could indicate the existence of ______.
Wood-boring beetles
Betty hired a contractor to replace her gutters. Within days, the gutters leaked and flooded her basement. She complained to the contractor, who replaced the gutters again. The next time it rained, the gutters leaked and flooded Betty’s basement a second time. Frustrated, Betty decided to file a lawsuit against the contractor in an attempt to recover the money she lost. This is an example of ______.
Suing for damages and breach of contract
Prakesh and Jean have always wanted to renovate an old home. They found a Victorian that hasn’t been lived in for years and are considering making an offer. Their agent warns them that the property as it stands now may not be insurable. Which of the following might make it uninsurable?
- The 100-year-old wiring
- The crumbling driveway
- The lack of closets
- The slate roof
- The 100-year-old wiring
Which of these situations represents the illegal practice of blockbusting?
- Celia, a licensee, distributed a flyer in several neighborhoods, claiming that gentrification of those neighborhoods will increase property values.
- Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values.
- Estelle, a broker, warns potential clients about the upcoming zoning change in a neighborhood that is currently zoned as residential.
- Kian, a mortgage broker, refuses to underwrite mortgage applications from applicants who are Hispanic or Asian.
- Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values.
Which of these describes a bridge loan?
- Frieda is leasing a property from Thomas, and has the first right to purchase the property if Thomas decides to sell it.
- Gina is moving across the country to be closer to her family. Her existing home hasn’t sold, but she is ready to purchase her new home.
- Rhonda is purchasing land from Kenneth on which she hopes to build a tiny home. Kenneth carries the mortgage note.
- Terry and Carla take out a home equity loan to make the down payment on a vacation home in Mexico.
- Gina is moving across the country to be closer to her family. Her existing home hasn’t sold, but she is ready to purchase her new home.
(A bridge loan is an option that will help Gina make the down payment on her new home while waiting for her existing home to sell.)
How would you calculate the transfer tax if it’s $.35 per $1,000 of the sales price ($400,000)?
(400,000 ÷ 1,000) x .35
Lowell used to own 17 acres of property on the bay. After last year’s hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell’s loss of acreage?
Avulsion
(Avulsion is the loss of land by a sudden, large-scale change in water flow. A hurricane would create a sudden large change in water flow.)
Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.
Easement by necessity
(This describes an easement by necessity. One way to remember this type of easement is by thinking of the importance of getting access to a road.)
Edric owes $115,000 on his lakefront home, which he’s selling for $350,000. He’s spent $73,000 in major renovations, and he wants to take that expense into consideration when he calculates how much he’ll actually pocket at closing. What number does he come up with?
$162,000
(Once Edric’s loan is paid off, he’ll be left with $235,000 ($350,000 – $115,000). When he subtracts the cost of the renovations, he’s left with $162,000 ($235,000 - $73,000).)
You’re showing your buyers a house that clearly has a second-story addition. What important thing do you need to find out from the sellers?
Whether or not the addition was permitted
A family of four, with children ages six and nine, is denied the opportunity to view an available unit at a community that caters to seniors. Which of the following statements is true?
- The federal Fair Housing Act allows an exemption for communities that are designated for senior use.
- The federal Fair Housing Act allows an exemption for communities that don’t have playgrounds or play areas for children.
- This is a violation of the federal Fair Housing Act because it discriminates on the basis of age.
- This is a violation of the federal Fair Housing Act because it discriminates on the basis of familial status.
- The federal Fair Housing Act allows an exemption for communities that are designated for senior use.
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?
$117,687.80
When considering buying property subject to an existing lease, it’s critical for your client to clearly understand the lease terms, including the property management responsibilities, rent amount, renewal/purchase options, and the ______.
Lease duration
Which of the following scenarios best describes a net listing?
- Carmel is selling her condo for $280,000 and is offering 6% commission to the listing broker.
- Jason is listing his duplex for $400,000 but reserves the right to find his own buyer and not have to pay a listing commission.
- Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
- Ralph is selling his townhome for $225,000 and paying a brokerage fee of $25,000.
- Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?
- Agency disclosures
- Buyer representation agreement
- The original sales agreement and any addenda
- The title
- The original sales agreement and any addenda
(The original sales agreement and any addenda to that agreement must be accurate. They should clearly identify the property and all parties to the transaction.)
Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current year’s property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?
The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit.
(These taxes have already been paid, so they are a prepaid item. They’ll appear as a buyer debit and seller credit at closing.)
When does an agent’s fiduciary duty of loyalty to the client begin?
The moment both parties agree to an agency relationship
What’s the purpose of title insurance?
It protects the buyer against loss resulting from previously unreported title defects.
When considering loan risk, which two items will lenders consider in equal measure?
Borrower and property
(The property’s value (as underlying collateral) and the borrower’s ability to repay the loan will be equal considerations for the lender.)
In which of these situations did the licensee breach the fiduciary duty of loyalty?
- Margo tells her seller client Troy that his property is worth less than it really is so he will get a quick sale.
- Michael submits all offers he receives on Jarrod’s property.
- Steven postponed his vacation so he could attend his seller client’s closing.
- Tanaka refuses to encourage his seller client to lower his asking price.
- Margo tells her seller client Troy that his property is worth less than it really is so he will get a quick sale.
Imagine that you’re an active real estate licensee as well as an architect, and you’d like to partner with a builder who’s just beginning a development. Which of these creates agency coupled with interest?
- You agree to design the houses for this builder in return for getting the listings when the properties are finished.
- You agree to list the properties for a reduced commission once they’re built.
- You have the builder and developer sign listing agreements now that will be effective when the properties are complete.
- You tell the builder that he has to hire you to design the houses if the builder wants you to list them when they’re finished.
- You agree to design the houses for this builder in return for getting the listings when the properties are finished.
(By providing architectural design services in return for the listings, you’ve gained an interest in the properties being developed that will pay off when the properties are sold.)
Which of the following is a common element of a buyer representation agreement?
- Closing date
- Description of the property being sought
- Method of financing
- Property address (including legal description)
- Description of the property being sought
Quentin brought an application before city council to build a shopping mall on 17 acres south of town that currently don’t have a zoning designation. The council referred him to the planning commission, which will review the application in light of the city’s ________.
Comprehensive plan
Since the parcel isn’t currently zoned, zoning should be established in alignment with an area’s comprehensive plan.
Martha made an offer to buy Drake’s home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.
Accepting partial performance
Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here?
Plottage
Stan is a home inspector who’s evaluating a home for potential buyers. He pointed out that neither of the two bathrooms had vent fans installed. Why is this a potential problem that will be noted on the inspection report?
The lack of air circulation in a moist room can lead to mold growth.
Which of these is a violation of the RRP Rule?
- A homeowner performs DIY work in a home built prior to 1978.
- A seller of a home built in 1952 doesn’t make the appropriate lead disclosures.
- Contractors from a home improvement store install windows or doors.
- Contractors perform renovations that disturb lead-based paint without holding proper certification.
- Contractors perform renovations that disturb lead-based paint without holding proper certification.
A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal each month?
$1,110.64
Wendell just listed Barb’s home. Barb told him that there weren’t any easements on the property, and Wendell hasn’t seen a copy of the survey. What is Wendell’s responsibility relative to the disclosure of any easements?
He only needs to disclose easements if they’re known.
Patsy’s home had been on the market for five weeks, and two brokers had buyers who were ready to make offers. If Patsy accepted one of those offers, the corresponding broker would be the only one to earn a commission. What type of listing does this describe?
Open listing
Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land’s value, he jumped at the opportunity. What’s this an example of?
Plottage
Which of these statements about the size of a section of land is NOT true?
- A section is 43,560 square feet.
- A section is 640 acres.
- A section is larger than a hectare.
- A section is one square mile.
- A section is 43,560 square feet.
An acre is 43,560 square feet. A section is one square mile, or 640 acres. A hectare is a 100-acre measurement.
The Nettles have accepted the Briars’ purchase offer, and both parties have signed the sales contract. What type of contract do the Nettles and the Briars have?
Executory
(The Nettles and Briars have a valid contract that’s in the process of being completed. Because one or more terms of the contract must still be completed, they have an executory contract.)
How many acres are in a parcel described as, “The E 1/2 SE 1/4 NE 1/4 Section 3, Township 4 North, Range 2 East of the 6th PM”?
20
(This legal description defines half of a quarter-quarter section. A quarter-quarter section is 40 acres; half of a quarter-quarter section is 20 acres. Alternatively, multiply the three fractions’ denominators (2 × 4 × 4) and divide into 640 (640 ÷ 32 = 20).)
Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?
FHA, VA, or conventional
(The fact he was in the military doesn’t mean he has to take a VA loan. There isn’t enough information to determine the best loan, so at this point all loans mentioned are viable options to consider.)
Recently retired Admiral Bongo and his wife, Lucy, contact you. They want you to help them purchase their dream house now that he’s retired, but one that has the necessary accommodations for the admiral’s disability. They also confide in you that they don’t have a lot of money saved up for a down payment. Which type of financing may work best for them?
A VA loan, which requires no down payment.
A buyer with a $350,000 loan has a monthly principal and interest payment of $2,102.36. If $1,801.23 is interest, what’s the new principal balance after the first payment is applied?
$349,698.87
What are the two types of physical depreciation?
Curable and incurable
Two types of physical depreciation are curable and incurable depreciation.
A quitclaim deed does which of these?
- Transfers a property with only the covenant of warranty
- Transfers the property with full covenants
- Transfers without warranty any interest or title the grantor has when conveying it
- Transfers with warranty any interest or title the grantor has in the property when conveying it
- Transfers without warranty any interest or title the grantor has when conveying it
Which of the following is an example of an easement?
- A path providing neighborhood access to a pond cuts through part of Hillary’s property.
- Michael installed a basketball hoop next to his driveway, six inches outside his property.
- The city seized a formerly private parcel of land for public use.
- The state took ownership of Don’s property when no heirs could be located following his death.
- A path providing neighborhood access to a pond cuts through part of Hillary’s property.
Your buyer client, Percy, needs to obtain financing to buy his dream house. What’s his first step?
Obtain a pre-qualification letter.
When interest rates are ______, buyers are often priced out of the market.
High
The property management agreement between owner Susan and property manager Phil creates a relationship where Phil is the general agent for Susan. This means that Phil has the legal ability to independently _______.
Handle all of the daily operations required to manage the property
Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael’s vinyl album collection. What does the record collection represent?
Consideration
The MARIA acronym helps to identify the five tests of a fixture. Which of the following tests refers to how and whether the item is attached to the property?
- Adaptability of the item to the land’s use
- Agreement of the parties
- Intention in placing item on land
- Method of annexation
- Method of annexation
The Swansons left the family property to their son, Jason, with the stipulation that he does not build on it. The type of estate Jason holds is ______.
Fee simple defeasible
Seth owns a property on a small island with six other property owners. Recently, Seth built a fishing pier along the water’s edge; however, the pier is actually on his neighbor’s property, which Seth has no rights to. What might this be an example of?
Encroachment
One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______.
Bulk zoning
(These requirements are all indicative of bulk zoning, which may be seen in both commercial and residential areas, and which decreases density.)
What information does the Loan Estimate NOT provide to buyers under required disclosures law?
Final closing costs
Don and Becky realized too late that the contract they signed for the sale of their home didn’t include any language about a rent-back if the home they’re building isn’t ready in time. What can their listing agent do?
Create a contract amendment with the required language.
The elevator at Morningside Apartments is broken. Who is responsible for making sure it’s repaired?
The landlord
Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she’s current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue’s closing statement?
Credit of $721.50
(Tax daily rate: ($1,350 ÷ 365 = $3.70) 195 days (days from closing until year end) = a $721.50 seller credit. Any prepaid seller’s homeowners insurance will be refunded to the seller outside closing, so this doesn’t appear on the closing statements.)
Regina closed on the sale of her house to Tom on Thursday, then went to a second closing on Friday and sold it to Martin. How could the title company in Martin’s transaction have missed the fact that Tom had purchased the property?
Tom’s title company didn’t have time to record Tom’s deed before Regina closed with Martin.
(Tom’s title company and the public records official wouldn’t have had time to record the deed before Regina closed with Martin.)
Lawrence is a buyer closing on a home purchase for which he’s obtaining financing. He receives a Loan Estimate from his lender. What’s the purpose of this document?
To detail the estimated closing costs for Lawrence’s loan
(The Loan Estimate, which the lender must provide within three days of loan application, provides an estimate of mortgage loan costs.)
Which of the following scenarios accurately describes the similarities between an open listing and an exclusive agency listing?
- In both types of listings, sellers are required to pay a commission to all of the brokers who list the home.
- In both types of listings, the broker owes the commission regardless of who sells the property.
- In both types of listings, the seller who finds the buyer won’t owe a commission.
- In both types of listings, the seller will owe a commission to the broker who brings the buyer.
- In both types of listings, the seller who finds the buyer won’t owe a commission.
(In both open listings and exclusive agency listings the seller doesn’t have to pay a listing agent commission if the seller finds a buyer.)
Johnstone’s Realty is a new discount, menu-based brokerage firm. Its approach usually results in a lower listing commission rate than other firms offer. Johnstone’s also offers a lower cooperating brokerage split than most other firms. Business is booming for Johnstone’s, and the remaining firms in town are concerned. These brokers agree to not show Johnstone’s listings to their buyer clients. What is this an example of?
Group boycotting
While showing your buyers through a home, you flipped on the light in the powder room and were concerned because the light switch felt warm. Why is this a concern?
Warm light switches might mean there is an electrical problem.
What’s the relationship between the Loan Estimate and the Closing Disclosure?
Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate.
Which statement about lead-related health problems is true?
- Lead can be traced to senioritis.
- Lead causes blindness upon contact with the eyes.
- Lead is associated with coronary heart disease.
- Lead may cause behavioral problems, learning disabilities, seizures, and, in extreme cases, death.
- Lead may cause behavioral problems, learning disabilities, seizures, and, in extreme cases, death.
What does the Federal Trade Commission regulate?
Advertising
What’s the rate of capitalization of a property generating net property income of $25,000 per year that’s valued at $312,500?
8%
(The capitalization formula is value = income ÷ rate of capitalization. To determine rate of capitalization, divide Income by value ($25,000 ÷ $312,500 = 8%).)
Breanna signed a purchase offer stating she’d buy Kathy’s home for $150,000. Kathy rejected that offer but said she’d sell it to Breanna for $200,000. Breanna agreed to these terms, and they added their signatures. Which of the following statements is correct?
- Breanna accepted the offer Kathy made.
- Kathy accepted the offer Breanna made.
- The contract is invalid.
- The contract is valid but unenforceable.
- Breanna accepted the offer Kathy made.
Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who’s interested in Gertrude’s property. What restrictions are in place for Homestead Realty?
Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude’s confidentiality.
(Homestead must adhere to its fiduciary duties of confidentiality (to Gertrude) and disclosure (to all parties).)
Whose role is it to develop the comprehensive master plan?
Planning board members
Morgan has agreed to sell his home to Dierks, and they’ve signed a contract. Which of these actions changes the contract from executory to executed?
- Dierks delivered the earnest money to Morgan’s broker.
- Dierks’ lender funded the loan, and closing took place.
- Dierks’s lender approved the mortgage loan.
- Morgan completed the inspection repairs that Dierks requested.
- Dierks’ lender funded the loan, and closing took place.
An example of this type of leasehold estate is a month-to-month lease.
Periodic estate (A periodic estate automatically renews at the end of its lease term, such as at the end of a given month.)
Farm families financing the purchase of properties in rural areas may be able to obtain financing through this government agency if they meet certain criteria, such as income requirements.
Farm Service Agency
Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank’s property?
$4,375
(One acre = 43,560 square feet. Figure his lot acreage first (54,450 ÷ 43,560 = 1.25 acres). Since the two lots are comparable, calculate the price of the comp ($3,500 x 1.25 = $4,375), which is a good list price for Frank’s lot.)
Which of these is a NOT a reason why agency disclosure is mandated?
- Before buyer representation came into being, buyers were often unaware that the agent they worked with actually represented the seller.
- Consumers may compromise their bargaining position if they’re not aware how agency relationships work.
- Consumers often don’t realize that the agency relationship guarantees that they benefit from the agent’s fiduciary duties.
- Real estate transactions aren’t covered by consumer protection laws; agency law and disclosures provide the only protections.
- Real estate transactions aren’t covered by consumer protection laws; agency law and disclosures provide the only protections.
(Real estate transactions are covered by consumer protection laws; agency law and agency disclosure provide additional protections.)
Which of the following is true about tie-in arrangements?
- They involve market allocation.
- They involve price fixing.
- They’re an antitrust violation.
- They’re a type of mortgage fraud.
- They’re an antitrust violation.
Gunther’s gross monthly income is $3,800, and he has no monthly debt payments. The lender’s qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What’s the maximum housing payment Gunther can afford?
$1,064
(Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing ratio ($3,800 x 28%).)
The benefits of a home warranty for buyers are clear. Why might sellers want to offer a home warranty to buyers?
To protect themselves from any claims after closing.
The fibers of ______ are dangerous when inhaled because they can lodge in the lungs and intestines, causing cancer.
Asbestos
Which of the following is a true statement about building code regulations?
- If there’s no state or local building code to cover a situation, the national code applies.
- States have the authority to change national building code requirements.
- The building code provides the maximum standards for buildings.
- When state and federal building codes conflict, the less strict code prevails.
- If there’s no state or local building code to cover a situation, the national code applies.
Which type of pest may make mud tubes—tunnels that run along your walls—or shed tiny wings?
Termites
Trina is a licensee at Midtown Homes. Which of these factors indicates that she’s classified as an employee?
- She’s eligible to participate in the firms 401k retirement plan.
- She’s required to belong to the National Association of REALTORS®.
- She works from both her home office and an office the firm provides.
- The brokerage firm supervises her.
- She’s eligible to participate in the firms 401k retirement plan.
Which of the following statements about the promissory note is true?
- A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note’s terms.
- A promissory note isn’t a legal document.
- A promissory note isn’t transferable, so it must be held by the original lender until paid in full.
- A promissory note serves as collateral for a mortgage loan.
- A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note’s terms.
(The promissory note is evidence of the debt that specifies the borrower’s financial obligations. Collateral for the note is typically the property on which the loan is made. It’s a negotiable instrument.)
You represent a seller as a listing agent. Do you owe any duties to buyer agents?
Yes, the duty to cooperate on showings
(You owe buyer agents (or seller agents, if you’re working with the buyer) the duty to cooperate on showings as well as honesty and fairness.)
Alex’s client doesn’t want prospective buyers to track dirt and mud throughout her clean home. She asks Alex to place a box of booties by the front door with a sign asking visitors to wear the booties while viewing the home. Alex does as his client instructs—no questions asked. What fiduciary duty is this an example of?
The duty of obedience
When Stacy’s clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this legal or illegal under the Real Estate Settlement Procedures Act?
This is illegal under RESPA because it’s considered a kickback between settlement service providers.
You’re representing Crystal in the purchase of a house. Crystal has a trust fund and can more than afford the house on which she’s made an offer. Which of these statements is true?
- Your duty of confidentiality to your client dictates that you not disclose your client’s financial situation to the seller.
- Your duty of disclosure to customers and third parties requires that you disclose Crystal’s financial status to the seller.
- Your duty of honesty and fairness to customers dictates that you must share with the seller Crystal’s ability to pay more for the property than she offered.
- Your duty of working in your client’s best interests means you should be showing her properties that are in a higher price range since she can afford it.
- Your duty of confidentiality to your client dictates that you not disclose your client’s financial situation to the seller.
Alexandra sells her house to Clark for $178,000. They negotiate to split the transfer tax, which has a rate of $0.33 per $100. What do they each pay to cover the transfer tax?
$293.70
The total transfer tax is $587.40 ($178,000 x .0033), so they each pay $293.70 ($587.40 ÷ 2).
Two large local brokerage firms agreed to lower their commission rates to the same amount, approximately 1% lower than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?
The agreement between the two firms
Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt’s newly built homes is the ______.
Cost approach
Which of these tasks must a licensee perform for buyer clients?
- Advise the buyer on how to get the seller to come down on the asking price.
- Ensure that the buyer receives copies of all signed paperwork.
- Explain to the buyer how to deposit the earnest money into the seller’s personal checking account.
- Explain to the buyer that there’s really no need to review transaction documents because they’re all standard.
- Ensure that the buyer receives copies of all signed paperwork.
What is true about a material fact that a licensee must disclose?
A material fact may have more or less effect on a buyer based on the buyer’s needs and values.
What’s an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires?
Discount point
Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______.
Accepting liquidated damages
Kelly is purchasing a property that has an assessed value of $160,000. If the tax rate is 2.5%, what will Kelly likely pay annually in property taxes?
$4,000
Katherine purchased a property for $255,000, borrowing $242,250. The assessed value of the property is $249,700. The property appraisal came in at $257,000. Which of these amounts is used in calculating the transfer tax?
$255,000
Transfer tax is calculated based on the purchase/sales price ($255,000).
Why is a foreclosure more likely to have title issues than a non-foreclosure?
Borrowers who can’t afford loan payments may have taken out other loans against the property.
Simon recently passed away. He owned title to his property in severalty, as a fee simple absolute estate. What will happen to his property?
His heirs, as described in his will or the state law of descent, will get the property.
Henrietta is 17 years old. She wants to sell the property given to her by her grandmother. Which covenant provided by the general warranty deed may prevent her from doing so?
The covenant of the right to convey
The covenant of the right to convey requires that the grantor have legal capacity to convey, and Henrietta is a minor.
Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?
Correlation
(Through a correlation process, the most weight may be given to one or two comparables, or equal weight may be given to all. The term reconciliation is often synonymous with correlation.)
Which entity services rural development loans?
FSA
The Farm Service Agency, an agency of the USDA, administers this program.
Gene, a real estate licensee, prefers to use electronic documents and signatures because it means he doesn’t have to track people down to deliver documents or have them signed. Which of these statements is true?
- Brokerage firms can require that clients accept the use of electronic documents and signatures.
- Licensees can require clients to accept the use of electronic documents and signatures.
- Parties to the contract decide whether or not to accept the use of electronic signatures and documents.
- Some states require the use of electronic documents and signatures in real estate transactions.
- Parties to the contract decide whether or not to accept the use of electronic signatures and documents.
Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe?
Prepayment
What does the metes and bounds system use to develop a property’s legal description?
Compass headings and directions
The metes and bounds system uses compass headings and directions.
LaTonya’s aunt left her a bungalow on the outskirts of the city. For many years, it was the place for family holiday gatherings, and LaTonya’s sister was even married there. That’s why her family is so upset to learn that she plans to sell the bungalow as soon as she gets it cleaned out. Which real property right allows her to sell the property?
Disposition
(The right of disposition includes the right to determine how, when, and if the property is to be sold or transferred to another owner.)
Adamsburg, a bedroom community outside the city, is growing by leaps and bounds. There’s been a boom in the number of children under age 12. Mia wants to open an in-home daycare, but she lives in a neighborhood that isn’t zoned for home occupations. She applied for a/n _________ and, after a public hearing, was granted one to operate the daycare.
Special use permit
Corinne is 68 years old and employed full time. She’s of Spanish descent, is raising her 12-year-old grandson, and lives with her partner, Katherine. She requires an accessible apartment because she uses a wheelchair. Under which of the following federally protected classes might Corinne be protected if she faces housing discrimination?
- Age, employment status, national origin, familial status, and sexual identity
- Age, race, familial status, sexual identity, and disability
- National origin, sex, disability, and familial status
- Religion, familial status, and disability
- National origin, sex, disability, and familial status
Your client is purchasing a single-family home with a conventional loan. The listing price is $150,000. Does this situation require a licensed or certified appraiser?
No, since the sales price is less than $400,000.
(Federal law exempts this property from the certified appraisal requirement because the sales price is less than $400,000. However, it’s always a good policy to pay for the best available service or product, regardless of the lender’s legal obligation.)
Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it?
Compare it to the Loan Estimate.
John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted’s property several years earlier. Which general warranty deed covenant does this represent?
The covenant against encumbrances
(The covenant against encumbrances assures the grantee that no encumbrances exist other than those that are publicly recorded or noted in the deed.)
Private mortgage insurance may be required on conventional loans where the loan-to-value ratio is in excess of ______%.
80
(Loans above this amount don’t conform to Fannie Mae/Freddie Mac guidelines, so a lender may require PMI to offset the risk.)
Which of these would most likely be an implied contractual condition in a real estate sales contract?
- Buyer and seller names
- Freedom from fraud and misrepresentation
- Property location or description
- Purchase price
- Freedom from fraud and misrepresentation
Marketo Building Designs is selling the air rights above its office building. The lot is 450 feet by 350 feet. How would you determine the air lot height in order to calculate the area?
The city or other governing authority establishes the air lot’s height.
(Because of safety and other concerns, municipalities typically establish the height of air lots in their jurisdictions.)
Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be?
Easement in gross
Angelo’s aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?
Ordinary
(Ordinary life estates are granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).)
Broker Sam has extended an offer to licensee Jane, who has accepted the offer. Jane will work as an independent contractor for Sam. Based on this, which of the following statements is true?
- As an independent contractor, Jane will not have to fill out any tax-related or IRS-related paperwork.
- It is up to Jane whether or not she wants to have taxes withheld from her pay. If she does choose to have taxes withheld, she must complete a W-4.
- Jane will need to fill out a W-4 for tax withholding information.
- Jane will need to fill out a W-9 for IRS reporting purposes.
- Jane will need to fill out a W-9 for IRS reporting purposes.
How might the lengthy purchase process for a short sale or foreclosure impact a buyer’s financing?
An existing interest rate lock may expire before the transaction is ready to close. (Interest rate locks are only viable for a short period of time. The transaction time to close a distressed property sale may be longer than the interest rate lock period, forcing the buyer to lock the rate again and potentially increase loan fees.)
Which entity typically enforces the code restrictions and licensing and insurance requirements for contractors, thereby enforcing the building code?
Local building department
What type of timeshare involves a buyer agreeing to pay a one-time purchase price and an annual maintenance fee, and in return selecting an accommodation time and having the right to use the unit for a specified number of years?
Vacation
When real estate licensee Brian discovered that Arnold was using a “Choose Your Neighbor” letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?
A charge of agreeing to discriminate by limiting access to the property
Property ownership gives the title holder a bundle of rights. What’s significant about the concept of a bundle of rights?
It describes the ability to separate one right from the others while leaving the rest of the bundle intact.
(The bundle of rights is conceptualized as a bundle of sticks, which allows each right to be separated from the others without destroying the rest of the owner’s rights.)
What does the “T” in PITI stand for?
Taxes
Which of these scenarios is a violation of federal fair housing laws?
- Janae refuses to rent an apartment to a Greek couple whose credit history is sketchy.
- Maureen, a buyer, selects a house in a neighborhood because of its demographic makeup.
- Miguel follows his client’s request to only show him properties where the neighborhood is mainly Hispanic.
- Wanting to be closer to her Cuban community, Miranda asks her agent to show her properties in the West Palms area, so he focuses his search on that geographic area.
- Miguel follows his client’s request to only show him properties where the neighborhood is mainly Hispanic.
Which statement about asbestos is true?
- Homeowners can safely remove it.
- It’s harmful only if left in place.
- It’s not harmful at low levels.
- No amount of it is considered safe.
- No amount of it is considered safe.
What type of value is of interest to taxing authorities?
Assessed value
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what’s the housing ratio?
23%
The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.
In completing a CMA, finding a comparable (competitive) property that had a quick sale can indicate which of the following?
- It’s a buyer’s market.
- The market for similar homes is good.
- The other agent was incompetent.
- The property was priced too high.
- The market for similar homes is good.
What does the lot and block system use to develop a property’s legal description?
Plat references
Lot and block uses plat references to develop a property’s legal description.
Your client, Ray, is worried about title issues that may arise after closing. Remind Ray of his secret protection: ______.
Title insurance
The legal description of the project, easements that run with the land, and street and traffic patterns are all under consideration when a local planning board ______.
Reviews a developer’s project plat
Frontage (or front foot) refers to what?
A property’s boundary line that’s adjacent to a road or waterway
Related to title insurance, what is “subrogation”?
A covered party grants permission to the title company to pursue the party who caused a claim or loss.
(When the title company is forced to pay a claim against the policy, the covered parties give the title company permission to pursue the party who caused the loss. The covered parties are said to “subrogate” their rights to the title company.)
A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what’s the list price for this parcel?
$763,560
The Office of Fair Housing and Equal Opportunity is a part of which federal department?
HUD
Jorge accepted a seller’s offer of insurable title. The transaction hasn’t reached closing, and a previously unknown title defect has been revealed. What happens now?
The seller may not be required to attempt to clear the defect before closing.
(The seller may not be required to clear the defect before closing; depending on the type of defect (e.g., an easement) it may not impact closing. Other types of defects may require action before closing.)
What’s the best definition of real property?
Real estate, plus all of the interests, benefits, and rights included in ownership
When it comes to earnest money, which of the following statements is true?
- Earnest money is rarely the subject of lawsuits against real estate licensees.
- Earnest money must be placed in escrow.
- The amount of earnest money is non-negotiable between the buyer and seller.
- The seller dictates the amount of earnest money in the MLS listing.
- Earnest money must be placed in escrow.
Informing parties of material facts related to a transaction describes the duty of ______.
Disclosure
When calculating loan-to-value ratios, which of the following will be used by the lender?
The lesser of the sales price or appraisal value
Drew violated the terms of his lease by having pets, so property manager Sheila has started ______ proceedings to get him removed from the apartment.
Eviction
Which of these is NOT an example of an agent executing the duty of reasonable skill and care?
- Kevin, Corinne’s buyer agent, made several mistakes on Corinne’s offer. Most were minor, but one could end up costing Corinne.
- Marta refuses to list a commercial property because her expertise is in residential real estate.
- Morgan is careful to protect and manage all his client’s earnest money deposits.
- Rex promptly submits all offers to his seller client.
- Kevin, Corinne’s buyer agent, made several mistakes on Corinne’s offer. Most were minor, but one could end up costing Corinne.
(The duty of reasonable care and skill requires licensees to exercise caution, practice within the scope of their expertise, and apply their skills and knowledge to offer an expert level of client representation.)
Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description?
Metes and bounds description
Rusty received an acceleration letter from his mortgage lender. What is the most likely reason for receiving this letter?
Rusty is two or three months in default.
Mariah was appointed to a two-year term on Garden City’s planning board. She’s looking forward to meeting her fellow board members and working collaboratively on issues that affect their town. She’s been told that the first order of business is a revision of the document that outlines the community’s long-term needs and provides guidance on capital budgeting for those needs. What is this document called?
Comprehensive master plan
Your clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. How much would their principal and interest payment be per month? Plug in the numbers using the amortization chart in your resources see what the payment per month would be. Remember: The monthly payment multiplier is per $1,000 of the mortgage.
$1,073.64
The estimated payment is $1,073.64. Remember to divide $200,000 by 1,000, then multiply the factor (5.36822) by 200.
Jeung gave her agent an earnest money check, and the seller accepted Jeung’s offer. What will happen to the check now?
An escrow agent will hold the funds in a trust account until the agreement’s terms are satisfied.
What type of police power allows cities to identify specific uses for an area?
Zoning
The cost approach method Burt used before investing in his new community was highly dependent on his depreciation estimates. As they begin building the homes they realize the guest bedroom in each has a point of entry that prospective buyers do not like in the layout of the house. The depreciation of this design defect is ______.
Functional obsolescence (Burt’s investment is experiencing functional obsolescence, a form of depreciation or loss in value caused by defects in design, such as an atypical floor plan.)
Brynn’s listing agent told potential buyers that all offers on Brynn’s property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the _______.
Offerors
In a real estate transaction in which you represent the seller, your duty to other parties is to ______.
Treat them honestly and fairly
You must treat other parties in the transaction honestly and fairly, and you must disclose all material facts
Which of the following is more likely to act as a closing agent?
- An attorney or title company representative
- The broker
- The lender
- The seller
- An attorney or title company representative
A landlord with a strict “no pets” policy won’t rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation?
This is discrimination based on disability.
Which of these is an example of severability?
- Jules and Katrina are under contract for the purchase of Katrina’s house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.
- Mark’s contract with Reuben states that either party may sever the contract if any contract term is only partially performed.
- Misty’s lease agreement with Thomas contains a provision that permits her to sever the lease if Thomas doesn’t remodel the apartment as promised.
- Ricardo and Timothy are under contract in the sale of Ricardo’s office building. Ricardo’s tenant leases gives him the option to sever the lease agreements upon sale of the building.
- Jules and Katrina are under contract for the purchase of Katrina’s house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.
(Severability refers to the concept that a court can strike down one or more contract terms whiile leaving the remainder in place.)
Which approach to value measures the cost to produce a property, including land acquisition and construction costs?
Cost approach
An agent is trying to drum up business for a friend’s mortgage company. She offers to charge a lower commission rate to clients who use her friend’s mortgage company for their financing. What’s this an example of?
Tie-in arrangement
Oscar bought an older home and hired a contractor to replace the old knob and tube wiring throughout the house. He was invoiced for the work, but 60 days have passed, and Oscar has yet to pay the bill. The electrician filed a lien against Oscar’s house. What type of lien is this?
Mechanic’s
What forms the boundaries of a township?
Township lines and range lines
A part of your property is used by the local utility company to maintain its power lines. What’s this an example of?
Easement
Ezra’s listing sold for $100,000. His commission rate was 4%, and the property appraised at $95,000. What’s Ezra’s commission before splits or sharing with the cooperating agent?
$4,000
Frank is representing Jonathan in the sale of his home. A buyer approaches Frank at Jonathan’s open house, and Frank agrees to represent her in purchasing Jonathan’s house. What must Frank do to avoid an illegal dual agency situation?
Obtain dual agency consent from all parties.
Frank must have the consent of all parties to the transaction in order to perform agency duties as a dual agent.
Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?
Lot and block
Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this?
Easement appurtenant
(An easement appurtenant is attached to a parcel of land and transfers with the land. It grants the right to use adjoining land.)
Joyce just closed on a condo for $366,900 and put down 20% to obtain an 80% loan and avoid having to pay for private mortgage insurance. How much equity does she have in her condo?
$73,380
A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?
$3,200
Which of the following may be considered a stigmatized property?
- A home that has been on the market for more than one year
- A home where a homicide, suicide, or haunting occurred
- A home with a panic room
- A home with no basement
- A home where a homicide, suicide, or haunting occurred
If an apartment building is valued at $970,000 and has a capitalization rate of 9%, what is the net operating income?
$87,300
(The formula to determine net operating income when you know capitalization rate and value is: rate × value = income (R × V = I). Remember to convert the 9% into a decimal by shifting the decimal point two places to the left: .09 × $970,000 = $87,300.)
The Amarals are purchasing the house of their dreams and have plans to stay in it for at least the next three decades while they pay back their conventional 30-year loan. Their primary focus, over the life of the loan, is to reduce their payments as much as possible. What is something that could help them achieve this?
Discount points
The Slathertons are looking at buying a $300,000 property with a 20-year loan at a 6% interest rate. How much would their monthly principal and interest amount be? Plug in the numbers using the amortization chart in your resources see what the payment per month would be. (Use the amortization chart your lesson instructed you to print out.)
$2,149.30
Gerald practices real estate in a state that recognizes sub-agency. Which of the following statements is true of Gerald’s authority to appoint a sub-agent?
- He can independently appoint a sub-agent at any time during the transaction.
- He must receive the principal’s permission in writing in order to appoint a sub-agent.
- Only Gerald’s broker can appoint a sub-agent.
- Only the principal can appoint a sub-agent.
- He must receive the principal’s permission in writing in order to appoint a sub-agent.
Olivia owns lakefront property and therefore holds littoral rights to use the water as she sees fit because she owns up to the average high-water mark. Which of the following is she NOT permitted to do under her littoral rights?
- Build a dam to create a bigger beach area on her frontage.
- Install buoys to create a swimming area.
- Launch her boat from her dock.
- Put up a water volleyball net next to her shoreline.
- Build a dam to create a bigger beach area on her frontage.
What’s the penalty for violating federal do not call rules?
A fine of $40,000 for each violation
Which of these statements about a deed’s habendum clause is true?
- It describes any easements or liens against the property.
- It’s a description of the act of conveyance.
- It’s required in all deeds.
- It’s the full legal property description.
- It’s a description of the act of conveyance.
(The habendum clause, if used, describes the type of conveyance. It’s typically used if title being conveyed is less than fee simple.)
Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions must be true?
- Darren and Natalie are getting a USDA rural development loan.
- Darren and Natalie are using an FHA-insured loan.
- Darren and Natalie are using conventional financing.
- Darren and Natalie made an all-cash offer.
- Darren and Natalie are using an FHA-insured loan.
What economic principle is related to a property’s most profitable use that is both legal and economically feasible?
Highest and best use
Elaine owns a home on a flag lot behind James. Her easement for a common driveway runs through James’s property. What kind of ownership rights does Elaine have of the driveway that runs through James’s property?
Non-possessory
Travis made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid?
Sign the note, mark it “paid in full,” and return it to Travis.
Which of the following could be an indication of a foundation problem?
- Crack in a basement wall
- Doors that open and close easily
- Lack of moisture in the basement
- Windows that open and close properly
- Crack in a basement wall
You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?
Dual-license dual agency
(You and the other licensee from your firm are in a dual-licensee dual agency relationship. The broker is the dual agent and has designated you to represent the buyer and the other licensee to represent the seller.)
A town has just assigned a lower-density use zone to an area that previously allowed higher density. What’s one reason the town may have done this?
To limit overgrowth
In contract law, undue influence differs from duress in that duress includes ______.
Use or threat of force
How many acres are in a parcel described as, “The NE 1/4 SW 1/4 Section 3, Township 4S, Range 2W of the 6th PM”?
40
(This legal description defines a quarter-quarter section, which is 40 acres. Alternatively, multiply the two fractions’ denominators (4 × 4) and divide into 640 (640 ÷ 16 = 40).)
Which of these is essentially the same as fraud?
- A misstatement
- Fact bending
- Intentional misrepresentation
- Puffing
- Intentional misrepresentation
Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparables that lack features of his subject property, and others that have even more desirable features, to balance out the comparison.
Bracketing
(Bracketing determines a probable range of property values by comparing a group of comparable sales to the subject. The appraiser attempts to include both superior and inferior units of comparison such as age and transaction price.)
Kevin listed his house with you but isn’t offering a cooperating agent’s commission. Ji-eun represents the buyer, Marta, and Marta’s parents, Jean and Tom, are paying Ji-eun’s commission. On which of these factors is your agency relationship based?
- Kevin is paying your commission.
- Kevin owns the property you’ve listed.
- Kevin signed a listing agreement with you.
- Marta’s parents are paying the buyer’s agent commission.
- Kevin signed a listing agreement with you.
You’re on a planning board that’s discussing how to keep the city more livable by reducing building density. The subject of bulk zoning comes up. What is your response?
“That’s a great way to meet our objectives.”
The Telephone Consumer Protection Act is overseen by _______.
The Federal Communications Commission
Four brokerage firms operate in the same small city as Jackson’s firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?
No. The fact that the firms’ commission rates and splits are similar doesn’t necessarily mean they agreed to fix those values.
Jean is a licensee for At Home Realty. She chooses her own schedule, sets her own sales goals, and is compensated based on commission. She must complete three training courses each quarter and the required number of CE hours to maintain her license. She must belong to the local REALTORS® association. The firm doesn’t pay for employment taxes for Jean. She receives no insurance or other benefits. Which of these factors might cause the IRS to classify Jean as an employee instead of an IC?
- She must belong to the local REALTORS® association.
- She must take a required number of continuing education hours.
- She must take three training classes through the firm.
- She receives no benefits from the firm.
- She must take three training classes through the firm.
Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a _______ contingency, which is generally the most risky.
Home sale
Which of the following clauses directs the parties to a real estate sales contract to proceed in good faith, and not unduly delay the process?
- Acceleration clause
- Indemnification clause
- Severability clause
- Time is of the essence clause
- Time is of the essence clause
Under which types of agency agreement may a buyer and agent operate?
Open, exclusive right to represent, and exclusive agency
In many areas of the country, Marcellus shale has become a hot commodity. This type of rock produces gas, which can be mined, stored, and sold. Abe learned that his family farmstead sat over a rich deposit of Marcellus shale. What type of rights does Abe have relative to this shale?
Sub-surface rights
Managing broker Todd is often extremely busy supervising his brokerage and training new licensees. He doesn’t have time for his own clients, so he frequently sends his wife Cindy to meet with clients to sign transactional paperwork. Cindy doesn’t hold a real estate license but she does have a power of attorney (POA) for Todd. All fees are paid to Todd. What is the issue with Todd doing this?
Todd is prohibited from allowing anyone to use his principal broker’s license in order to perform real estate activities.
The economic principle that tells us that when supply goes up, price goes down, is commonly referred to as what?
Supply and demand
Harini had a lease with an option to buy on her condo since she wasn’t financially stable enough to purchase the condo when she first signed the lease. Two years later Harini was in great financial shape, but she found out that the owner legally sold the condo to another buyer. Harini has to move out next month. What must have happened?
The option expired.
Dean’s new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a ________ lease for the office space.
Loft
Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend’s neighborhood. It’s listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here?
Substitution
Jerry and Simon signed a contract so that Jerry could purchase all of Simon’s restaurant equipment for one price after Simon closes his restaurant next month. The contract contains a provision that states Jerry has one year from the purchase date to file a suit relative to the purchase. After the year is up, Jerry forfeits the right. What kind of contract clause is this?
Statute of limitations
Property manager Wayne understands that he may only pay for certain items from funds deposited in a trust account. Which of the following is a legal use of funds from the account?
- Administrative expenses for Wayne’s office
- Monthly invoice for building-wide internet service
- Repair of damaged wall after the tenant in 3B moved out
- Weekly salary checks for Brian the maintenance manager
- Repair of damaged wall after the tenant in 3B moved out
You’re working as a buyer’s agent for Neil and Sharon, who just found the home of their dreams. When they ask you about adding contingencies to their offer, what do you tell them?
“You definitely want to protect your interests, but let’s make it as easy for the seller as possible to choose your offer.”
Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?
$387,000
Shannon doesn’t understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?
Appraisal
Which of the following strategies would help to make a “Choose Your Neighbor” marketing letter non-discriminatory in its effect?
- Ensuring that the letter was given to neighbors on both sides of the street
- Giving the letter to at least 20 neighbors
- Listing the property on the MLS
- Providing the letter in multiple languages for non-English speakers
- Listing the property on the MLS
Your buyer clients have access to property tax information for each listing that you’ve given them. Why are they asking you about county tax assessment schedules?
The property taxes may change drastically after reassessment.
Natalie is a single mother of twins and receives government assistance to help make ends meet. She’s been living with her mother for the last few years but really wants to buy her own home to gain some independence. She’s got a little in savings and has good credit, but when a lender turns her away because she receives public assistance she worries that she’ll never be able to get a loan. What act prevents automatic discriminatory practices by lenders and protects individuals like Natalie?
Equal Credit Opportunity Act
Private mortgage insurance protects the lender in case the borrower ______.
Defaults on the loan
Under which of the following circumstances would the client and agent most likely mutually agree to terminate a listing?
- A buyer approached the seller with a much higher offer than the current listing price.
- The agent and client don’t agree on the best way to price, maintain, and market the property.
- The client has found a buyer and wants to avoid paying a commission.
- The client’s cousin just became licensed and needs her first listing.
- The agent and client don’t agree on the best way to price, maintain, and market the property.
Shelly’s listing sold for $650,000. The total commission generated from the sale is 5%, of which Shelly’s brokerage keeps half. Shelly has an agreement with her broker that she earns 90% of commission generated. How much will she be paid for this sale?
$14,625
Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan’s agreement?
The agreement terminates by force of law.
Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% in closing costs. How much money should he bring to closing?
$106,250
Elvin owns 150 acres of prime hunting land. Every year, he gets requests from private groups that would like to use his land for a day or two during hunting season. He sometimes grants these requests, but this year, he’s decided to only use it himself with his friends. Which right in the bundle of rights says that he can say no to these requests?
Exclusion
The right of exclusion gives Elvin the right to refuse other interests in his own property.
Debra’s listing agent, Raj, just called to tell her that he’d received an offer on her house and an earnest money check for $4,500. “I’m on my way over to go through the offer with you. I think you’ll like it!” Debra’s excited, and she knows exactly what she wants to spend that $4,500 on. What’s wrong with Debra’s thought process?
The earnest money doesn’t belong to Debra. It will be held in an escrow account.
In full seller disclosure states, whose responsibility is it to complete the seller disclosure form which will be reviewed by prospective buyers?
Seller
Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease and the other an absolute net lease. Why is his attorney arguing against the latter?
An absolute net lease has no legal defenses if Simon fails to pay.
(Simon has absolutely no legal recourse with an absolute net lease. With an absolute lease, Simon is still on the line for payment, even if the building is damaged or destroyed through no fault of his own.)
Carlton listed his property with an agreement end date of August 31. The property went under contract on May 12 and closed on July 2. When did Carlton’s listing agreement officially terminate?
July 2
Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He’s able to do this in part because of the ______ offered by the USDA Farm Service Agency.
Guaranteed loans
The USDA Farm Service Agency offers guaranteed loans to agricultural lenders.
For farmers and others who live in rural communities, a ______ loan may be available. One benefit of these loans is the option for a longer payback period.
Rural development
Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he’d initially agreed to and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue?
Arbitration
Frank owns a property on which there is walkway to the beach shared by his neighbors on either side. What is Frank’s property?
Servient estate
The servient estate is the giver of the rights to use the property—the property which serves the public good.
Your client, Darnell, is interested in buying a rental property that has current tenants. He plans to rent the property to friends the month after he buys it. Which of the following statements is true and could affect Darnell’s decision to buy the property?
- As the new owner and landlord, Darnell has the right to terminate the lease so his friends can move in.
- As the new owner, Darnell can change the lease term so that the current tenants have to leave 30 days before his friends to move in.
- If the existing tenants pre-paid the rent for a year to the former owner, they will also have to pay rent to Darnell.
- Unless stated otherwise in the lease, the existing tenants usually have the right to retain possession of a property, even if it’s sold during their lease term.
- Unless stated otherwise in the lease, the existing tenants usually have the right to retain possession of a property, even if it’s sold during their lease term.
Bethany has agreed to purchase Derrick’s property using a land contract. Who holds legal title to the property during the term of the loan?
Derrick
(When a land contract is used to finance the sale, the seller holds legal title to the property until the loan has been repaid, at which point the title is given to the buyer.)
Which of these is an example of practicing within your area of competence?
- Informing your clients that the odd odor in the property is from an ongoing black mold issue.
- Recommending that your married clients take title to their new property as joint tenants.
- Researching the property tax amount that a client will pay on the home he’s purchasing.
- Telling your client that the wood shavings outside the basement window means there are termites in the home.
- Researching the property tax amount that a client will pay on the home he’s purchasing.
Joshua just got a copy of the preliminary report from his title company and is surprised to see that there’s a mechanic’s lien against his property. What does he have to do to clear this lien?
Pay the bill that resulted in the mechanic’s lien.
Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn’t one previously and immediately increase the value of his investment. Which economic characteristic of real property is this?
Improvements
Antje’s clients closed on their property yesterday, but Antje still has some paperwork that she needs to deliver to them as soon as possible. Under which fiduciary duty is Antje acting?
The duty of accounting
Which of these is NOT one of the ways in which an agency relationship may be terminated without penalty for either the agent or the principal?
- Delaney signed a buyer’s representation agreement with Martha. After Delaney made an offer on a house, she changed her mind and terminated the agency agreement.
- Martha listed Sonja’s home for sale. Martha helped Sonja negotiate an offer and performed the other tasks required of her. The closing has taken place.
- Phyllis listed her home with Brad. Brad put the property on the MLS, but Phyllis hasn’t heard from him in more than two months.
- Richard listed Ole’s ski chalet for sale. Two weeks later, an avalanche destroyed the property.
- Delaney signed a buyer’s representation agreement with Martha. After Delaney made an offer on a house, she changed her mind and terminated the agency agreement. (Unless Martha agrees to terminate the agency agreement with Delaney, Delaney may still owe Martha the agreed-upon compensation for breaching this agreement.)
Mortgage, homeowners, and flood are types of _________ that may be included the mortgage payment.
Insurance
Discoloration along walls and sagging or uneven floors can be signs of ______.
Flood damage
The Hendersons don’t have enough money to make the full 20% down payment their lender requires. To close the sale, the seller is willing to finance a loan for the gap between the home’s list price and the amount the institutional lender is willing to loan. What’s this type of financing called?
Purchase money mortgage
Ted is in foreclosure but has some equity in his property. An investor suggests that Ted enter into a sales contract with him for a substantially higher price than the investor would actually be paying. The investor pockets the cash and allow the house to be foreclosed on. What sort of scheme is this?
Equity skimming
Which ownership type is defined by four unities: time, title, interest, and possession?
Joint tenancy (This is joint tenancy. Tenancy by the entirety requires a fifth unity (person). If one joint tenant dies, that tenant's interests go to the remaining joint tenants. If only one tenant is left, that tenant owns the property in severalty.)
A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month’s mortgage payment is interest?
$2,333.33
If a contract is for an illegal purpose, it’s ______.
Void
Tracy is looking in the MLS and sees a listing marked “REO.” Which of these statements regarding REOs is correct?
- An REO property is one that the lender is trying to help the owner sell before beginning foreclosure proceedings.
- Banks acquire REOs through failed foreclosure sales or deed in lieu of foreclosure actions.
- REOs are properties that the lender has given permission to sell for less than the loan amount.
- REOs refer to investment properties a bank owns.
- Banks acquire REOs through failed foreclosure sales or deed in lieu of foreclosure actions.
In which of these situations would a listing be most likely to terminate due to listing agreement expiration?
- A market with high inventory and low demand
- A market with low inventory and high demand
- A moderately-priced home in a neighborhood slated for renewal
- A moderately priced home sold as-is in a market full of investors
- A market with high inventory and low demand
When a licensee represents a seller, which one of the following statements is true about the licensee’s ability to list other properties that are for sale?
- The licensee isn’t permitted to list other properties for sale.
- The licensee is permitted to list other properties for sale as long as they’re not competing properties.
- The licensee is permitted to list other properties for sale, even if they’re competing properties.
- The licensee must list the seller’s property only for the first 90 days, after which the licensee may list other properties.
- The licensee is permitted to list other properties for sale, even if they’re competing properties.
Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he’s making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?
- The area rug in the dining room
- The banker’s lamps in the den
- The chandelier in the foyer
- The chimenea on the back patio
- The chandelier in the foyer
Which fiduciary duty is missing: loyalty, care, obedience, confidentiality, accounting, and ______?
Disclosure
Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance?
Her down payment of $50,000 isn’t at least 20% of the purchase price.
What’s the biggest security issue with using social networking sites to market your listings?
Criminals may use social networking sites to identify properties that are vacant or have high-end possessions.
The Federal Trade Commission is concerned with all ad claims but is most likely to be most concerned with ______.
Any ad that makes a health or safety claim or any claim that’s difficult for the consumer to evaluate
(The FTC is concerned with all ad claims, but it’s most concerned by any ad that makes a health or safety claim or any claim that is difficult for the consumer to evaluate.)
You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer?
Buyer agency
What is the overarching theme addressed by statutory duties in most states?
Licensees may not take any action that might be detrimental to the client’s legal interests.
(The overarching theme of statutory duties is that licensees can’t take any action that would adversely impact the client’s legal interests.)
Which of the following situations is an example of a non-agency relationship?
- Dutton was previously a licensee. He’s selling his home, and he wants Wanda, who’s currently licensed, to assist him with the paperwork.
- Kendra represents Steven in the sale of his home by helping him complete the necessary paperwork to make his offer.
- Licensee Alexa works closely with her buyer clients’ lender to be sure the lender has all information needed to approve the loan.
- Licensee Ingrid helps her neighbor Jeremy spruce up his house before Jeremy’s agent holds an open house.
- Dutton was previously a licensee. He’s selling his home, and he wants Wanda, who’s currently licensed, to assist him with the paperwork.
(A non-agent, also referred to as a transaction broker, may assist a customer with ministerial tasks.)
Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?
Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.
Tom and Jim are neighbors. Jim wants to buy Tom’s rental property. In the contract they sign, Jim is identified only as “the neighbor.” Which statute or contract element does this violate?
The statute of frauds
(The statute of frauds requires not only that a contract to convey property be in writing, but also that the contract identify the parties to the contract.)
Which statement about radon testing is true?
- It can only be performed by a licensed professional.
- It is not necessary.
- Test kits are available for purchase.
- Test kits are not available to the general public.
- Test kits are available for purchase.
(Test kits are available for purchase but must be sent to a laboratory for analysis. A radon technician can also place the test, pick it up and send it in for testing. Licensees should advise all buyers to have homes tested for radon regardless of the location.)
Because of the topography of Elsie’s and Lawrence’s respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence’s property line. What word or phrase best describes Elsie’s fence?
Encroachment
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. If $1,145.83 is interest, how much is applied to principal?
$896.88
What’s a good policy that a buyer’s agent should employ regarding contingencies?
Use contingencies judiciously to protect the clients and the deal.
Your client is purchasing a single-family home with a VA-guaranteed loan. The listing price is $150,000. Is an appraisal by a certified appraiser required?
Yes, and since the purchase is financed with a VA-guaranteed loan, the appraiser must be VA certified.
(A VA-guaranteed loan requires an appraisal by a VA-certified appraiser, who must also be licensed or certified by the state.)
Which act created an agency to investigate antitrust practices?
Federal Trade Commission Act
Which of the following is a typical accrued adjustment?
- Heating oil in the tank
- Prepaid taxes
- Unpaid real estate taxes
- Utilities billed and paid in advance
- Unpaid real estate taxes
(Accrued expenses are those that the seller owes at the day of closing but that the buyer will eventually pay, such as unpaid real estate taxes.)
Latrell purchased an old warehouse with the intent to create shared studio space for artists. However, he didn’t perform due diligence before the purchase, and it turns out that there are hazardous materials that need to be cleaned up first. Latrell took the prior owners to court, and the court ruled that Latrell is responsible for the costs of cleanup. What kind of liability is this?
Strict liability
Property owner Craig likes to sunbathe in the nude in his nice, private backyard. What part of the bundle of rights allows him to do this legally?
Enjoyment
The town planning and zoning board is considering some new zoning regulations to ensure that one of the neighborhoods maintains its designation on the National Register of Historic Places. What type of zoning are they likely to enact?
Aesthetic zoning
A homeowner has $80,000 of principal left to pay on her mortgage. Her home was recently appraised at $156,000, which is $13,000 more than what she purchased it for. How much equity does she have in her home?
$76,000
You need to perform a sales comparison for your clients. Comparable A’s adjusted sales price is $277,000. Comparable B’s adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients’ home?
Give more weight to the list price on the comparable that’s most similar to the property.
When a contract doesn’t provide specific dates for when the terms of the contract need to be met, what should the parties assume regarding performance of the contract?
Performance must take place within a “reasonable time.”
(When no specific dates are provided, the parties should assume that performance of the contract must take place within a “reasonable time.”)
A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?
External depreciation
Rhonda hasn’t paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean?
The HOA will be paid before any other liens, even a property tax lien.
Which offer would be the most appealing to a seller?
- A full-price offer waiving inspection, conventional financing with 20% down, closing in 45 days.
- An all-cash offer $15,000 below list price, closing in two weeks.
- An offer $10,000 over list price, contingent upon appraisal and inspection, conventional financing with 20% down, closing in 30 days.
- It depends on the seller’s needs and motivations.
- It depends on the seller’s needs and motivations.
A ______ is a method of conveying real property from one party to another.
Deed
Norman, the seller’s agent, notices a significant crack in the foundation that the inspector failed to note in the inspection report. Norman decides to keep this information to himself. He really needs to close this deal. Which fiduciary duty has Norman breached?
The duty of disclosure
What’s the relationship between the title search, title insurance policy, and document recording?
Title representatives and attorneys who perform title searches look for documents that are publicly recorded.
The Arbor Heights community passed a zoning ordinance that requires group homes designated for disabled citizens to be situated outside of city limits. This is a violation of the ______.
Fair Housing Act
Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine’s transaction covered by the Real Estate Settlement Procedures Act?
No; commercial and business loans are exempt from RESPA requirements.
Nevina may be creating an implied agency agreement if she does which of these?
- Contacts a mortgage broker to find out what first-time homebuyer programs are available
- Gives her neighbor a tour of another neighborhood home that’s on the market
- Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area
- Speaks to a local civic club about the homebuying process
- Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area
(Any time a licensee performs tasks that are usually part of an agency agreement, there’s risk of creating an implied agency relationship.)
Joan and Martha are entering into an 18-month lease with landlord Roger. Which of these statements is true?
- All lease agreements must be in writing to be enforceable.
- An 18-month oral lease is enforceable.
- It’s illegal for leases to cover terms of more than one year.
- Leases for periods of more than one year must be in writing.
- Leases for periods of more than one year must be in writing.
Following all of the client’s lawful instructions describes which fiduciary duty?
Obedience
Christine listed her house with you. Tailleur represents the buyer, Rebecca, and the seller’s mother, Freida, is paying your commission. Which of these factors determines how legal agency is determined in this situation?
- Christine listed the property with you.
- Christine’s mother, Freida, owns the house you listed.
- Freida is paying your commission.
- Tailleur represents the buyer.
- Christine listed the property with you.
Which option is true if a deed is not recorded after closing?
- The buyer must pay a fine to the seller.
- The entire closing is void.
- The property’s legal ownership can be challenged.
- The title never changes hands from the seller to the buyer.
- The property’s legal ownership can be challenged.
Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)
81%
Seth is a licensee working for a buyer, Britney. Britney wants to make sure the seller accepts her offer on a charming Cape Cod, so she tells Seth she wants to make a full-price, non-contingent offer right away. How should Seth respond?
“I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house.”
The property management ______ cements the agency relationship between the property manager and the owner.
Agreement
When market conditions indicate top-of-the-market pricing, is it always in your client’s best interest to price it there?
No, it still has to appraise.
Marcus, a listing agent, told a potential buyer that his seller client’s property had no flooding issues, though the seller had mentioned water in the basement a few years back when there was a particularly heavy rainy season. Which of these statements is true?
- Marcus committed intentional misrepresentation because he knew his statement was false.
- Marcus committed unintentional misrepresentation.
- Marcus didn’t commit misrepresentation, because the property current has no flooding issues.
- Marcus is guilty of puffery.
- Marcus committed intentional misrepresentation because he knew his statement was false.
Which of the following is considered unauthorized practice of law?
- Explaining a clause in a contract to a client
- Interpreting the legal consequences of a client’s actions
- Using existing forms an attorney has reviewed
- Using standard language for addenda
- Interpreting the legal consequences of a client’s actions
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?
Financing terms and cash equivalency
(When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.)
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400’ deep. What was the price per front foot of the property?
$1,335.67
(First, find the square footage (5.5 x 43,560’ = 239,580). You’re given one dimension of the rectangle, so find the other: 239,580 ÷ 400’ = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95’ = $1,335.67 per front foot.)
What is done to a landfill that is put out of commission?
It is capped.
Mike relocated for work and learned that the region in which he planned to buy a home had many old underground mines. In fact, Mike might even need to purchase mine subsidence insurance. What might a home inspector flag for Mike if there are any concerns about undermining?
A sinkhole on the property
Sheila is unable to use her designated timeshare week this year. What will happen?
She can exchange the week for another.
Timeshares allow one designated week to be exchanged for another.
The Johnsons have owned a small restaurant for more than 20 years. It’s open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons’ restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.
Inverse condemnation
Which of the following is price fixing?
- A brokerage requires all licensees to offer a fair cooperative brokerage fee.
- Three brokerages agree to purchase office supplies together to obtain a bulk discount.
- Twelve brokerages discuss compensation of associated independent contractor licensees.
- Two brokerages determine a standard commission rate.
- Two brokerages determine a standard commission rate.
Jane is selling her home to Micah. What must occur for Jane to effect a transfer of title to Micah?
Jane must deliver the deed to Micah.
Kelly is closing on the house she’s purchasing on Wednesday. Which of these statements is true?
- Kelly must receive the Loan Estimate at least four days before closing.
- The closing officer must deliver the Closing Disclosure at closing.
- The lender must provide the Closing Disclosure by Friday of the week before closing.
- The Loan Estimate amounts must be within 1/4 of a percent of the final settlement costs.
- The lender must provide the Closing Disclosure by Friday of the week before closing.
Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she’ll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?
It’s a commercial enterprise that’s open to the public.
If a business in a constructed building serves the public, then it falls under the ADA.
Frank is selling his deceased aunt’s home in DC and is having trouble completing some of the sections on the Seller’s Disclosure Statement. Who is legally able to give him information he can use to complete the form?
A licensed home inspector
In non-full-disclosure states, whose responsibility is it to notify sellers of their duty to disclose required items?
Licensee representing the seller
Your seller’s property has a power line running through the very back of the yard. What disclosable item is likely associated with the property?
An easement
One of your seller clients, Fannie, expresses concern about having to complete a property condition disclosure statement. You ease her fear by correctly advising her that ________.
By disclosing known defects, she will protect herself from liability lawsuits down the road
Adam is selling his home, which sits on nine acres, and knows that there’s an exterior injection well on the property associated with an oil and gas lease. Does he have to disclose this information to the buyer?
Yes, Adam must disclose the presence of the injection well.
If a homeowner corrected a property defect or malfunction, what’s true about its disclosure?
All repaired defects must be disclosed.
If a seller doesn’t provide property condition disclosures, does the buyer have any recourse?
The buyer can take the seller to court.
What can happen to a seller who inaccurately or deliberately withholds information on the seller’s disclosure form about a property’s physical condition?
The seller, and the seller’s agent, could be held liable for misrepresenting the property’s condition and face litigation from the purchaser
What does the parol evidence rule state?
In certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract.
When offer and acceptance has occurred, both parties enter into ______.
A mutual agreement
In a contract, the element of consent is also called _____.
Voluntary agreement
If a real estate contract is written for an illegal purpose, it’s ______.
Void
In the eyes of the law, why do people under age 18 lack contractual ability?
Because they’re minors.
Carl and Sadie, who are neighbors, got into a disagreement about early-morning noise on the weekends. The two came to an agreement: Carl promised to not mow the lawn before 10 a.m., and Sadie promised to put bark collars on her dogs in the early morning hours. Their promises represent the ______ in their agreement.
Consideration
Louellen is about to take out a mortgage loan from her credit union. The contract includes the following information: Louellen is offering her house for consideration and that the credit union is offering $350,000; Louellen will pay the loan back over a certain number of months at a certain rate; and Louellen’s signature, along with that of a credit union representative. What, if anything, is this contract missing in order for it to be legally binding, according to the statute of frauds?
Nothing is missing.
If a party to a contract lacks legal capacity but enters into a contract anyway, which party may void the contract?
The party lacking legal capacity
Jerry and Lewis have entered into a sales contract. They’re about three weeks into the transaction, with several terms of the agreement yet to be met. What type of contract do Jerry and Lewis have?
Executory
Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.
Enforceable
As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller’s disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?
Voidable
What is the difference between a unilateral contract and a bilateral contract?
In a unilateral contract, one party must act; in a bilateral contract, both parties must act.
Starla, 35, and Gwen, 32, are going into business! Gwen is buying a share of Starla’s franchise. Their attorneys drew up a contract that had Gwen providing $45,000 to Starla in return for 50% ownership. Gwen and Starla happily signed the contract, Gwen paid Starla the $45,000, and Starla presented Gwen with a notarized certificate showing Gwen’s 50% ownership in the company. What type of contract is this?
Valid
An executory contract is one that’s been ______.
Started
When does substantial performance of a contract occur?
One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met.
Bryce is tired of waiting for his subcontractor to get his part of the deal done. The agreed-upon deadlines have come and gone, and Bryce is losing money waiting for the subcontractor to meet his obligations. If the subcontractor isn’t going to honor his commitments, neither is Bryce. He decides to consult with his attorney and then terminate the contract. This is an example of ______.
Rescinding the contract unilaterally
Garrett wanted to move his real estate closing so that he can get through his wedding first. His broker and attorney encouraged him not to do it because of which contract clause?
Time is of the essence
Kirk and his cousin Dewey decided to buy a vacation home. They entered into a contract with the seller, Crystal. Before finalizing the sale, Dewey wanted out, but he doesn’t want to let his cousin down. So instead of pulling out altogether, Dewey convinced his son to replace him in the purchase contract. Kirk and Crystal agreed to the substitution, and Dewey was released from all his obligations under the contract. Dewey’s son is now the contracting party. What’s this an example of?
Novation
Novation involves discharging an existing contract and creating a new contract, substituting a new party is for one of the original parties to the contract. It may also include a change to the terms or conditions of the contract.
Buyer Lainie and seller Jackson are a week from closing on their sales contract when Lainie loses her job. She notifies Jackson right away, because without a job, she can’t get a mortgage. Jackson understands the situation, and the two agree to cancel the contract. Jackson returns Lainie’s earnest money. Which of the following is true of this situation?
This is an example of mutual rescission.
Many real estate contracts contain the phrase ______, reminding the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates.
Time is of the essence
What is the key difference between assignment and novation of a contract?
Novation releases the original party from all obligations, while assignment does not.
Nan, who’s selling her home to Moses, promises in writing to have a licensed professional repair the home’s leaky roof. After closing, Moses discovers that the roof was poorly patched by the homeowner and leaks whenever it rains heavily. Under the statute of limitations in Tennessee, if Moses wishes to sue Nan, he must do so within _____ of the contract breach.
Six years
When the Temporary Occupancy Agreement for Seller After Closing Amendment is attached to TAR form RF 401, which of the following items must the licensee complete on the form?
The occupancy term
When a sales contract doesn’t cover the terms needed by the parties, which of the following actions is a licensee allowed to take?
Add a standard addendum using standard language.
Your buyer client is ready to make an offer on a home. As you discuss terms to include in the offer, your client decides to require the seller to pay $5,000 of the buyer’s closing costs. How do you include this in the contract?
Add standard language under the Closing Cost and Discount Points paragraph of the contract.
What is the purpose of the Tennessee Association of REALTORS® form RF 707?
To provide standard language for a variety of special stipulations, addenda, and amendments in contracts
Licensee Brittany’s buyer client is terminating the purchase agreement because of an unmet contingency. Which one of the following forms will Brittany submit to the seller to complete the termination of the contract?
- RF 401 marked “Null and Void” on each page and signed by the buyer in the Termination block.
- RF 401 Termination of Purchase and Sale Agreement
- RF 481 Earnest Money/Trust Money Disbursement and Mutual Release of Purchase and Sale Agreement
- RF 636 Demand to Terminate Amendment/Addendum
- RF 481 Earnest Money/Trust Money Disbursement and Mutual Release of Purchase and Sale Agreement
Which of the following statements is true about completing TAR form RF 627, Temporary Occupancy Agreement for Seller After Closing Amendment/Addendum?
- A Short Term Lease Agreement can be used in place of TAR form RF 627.
- The buyer’s lender must approve the agreement before the form can be completed and attached to TAR form RF 401.
- The licensee will complete the form by filling in the blanks for a binding agreement or offer date, property address, occupancy term, and compensation.
- The seller’s insurance company must approve the agreement before the form can be completed and attached to TAR form RF 401.
- The licensee will complete the form by filling in the blanks for a binding agreement or offer date, property address, occupancy term, and compensation.
TAR form RF 627 is a specific agreement between buyer and seller for seller occupancy after closing. It requires the licensee to fill in the necessary blanks. The form specifies that it doesn’t create a landlord-tenant relationship between buyer and seller.
A real estate licensee is assisting a buyer client with the purchase of a retail strip mall. What’s the appropriate Tennessee Association of REALTORS® (TAR) form for this licensee to use ?
- CF 401 Commercial Purchase and Sale Agreement
- CF 402 Retail Property Purchase and Sale Agreement
- RF 401 Purchase and Sale Agreement
- RF 404 Lot/Land Purchase and Sale Agreement
- CF 401 Commercial Purchase and Sale Agreement
Which of the following items is included on both the commercial and residential purchase and sale agreements?
- Amount of earnest money
- Appraisal contingency
- Financing contingency
- Property condition disclosures
- Amount of earnest money
Minnie is the listing agent for a four-bedroom home. She receives an offer for the home written on TAR form CF 401. She contacts the buyer’s agent and asks that the offer be presented on a different form. Why?
The buyer’s agent used the commercial version of the purchase and sale agreement.
Why do residential and commercial real estate purchases require different contracts?
To provide the proper legal protections to the parties involved.
Which of the following duties is part of the licensee’s role in a residential lease transaction for a tenant client?
- Collect the tenant’s first month’s rent and security deposit and present it to the owner after the lease agreement has been signed.
- Determine what clauses should be included in the lease agreement and the monthly lease amount.
- Market the property that is being leased.
- Represent the client’s interest in all negotiations and transactions regarding the property lease.
- Represent the client’s interest in all negotiations and transactions regarding the property lease.
Which of the following is a leasehold estate for an unknown period of time, with either party permitted to terminate the lease by giving notice to the other?
- Estate at will
- Estate for years
- Freehold estate
- Life estate
- Estate at will
Ryanne is a tenant in a single-family home owned by Dominick. What type of interest does Ryanne have in the property?
Leasehold
Peter is a tenant in a single-family home owned by Cheyenne. What type of interest does Cheyenne have in the property?
Freehold
This commercial lease is a special lease agreement in which the landowner receives a cash payment for executing the lease, with more to come if drilling is successful.
Oil or gas lease
In commercial lease agreements, tenants pay the owner in exchange for ______.
The right to operate their business on the property
Liz is assisting a client who’s looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client’s behalf?
- Determine what clauses should be included in the lease agreement and the monthly lease amount.
- Help market her client’s business once the lease has been signed.
- Manage her client’s monthly lease payments to the owner.
- Represent her client’s interest in all negotiations and transactions regarding the lease of the property.
- Represent her client’s interest in all negotiations and transactions regarding the lease of the property.
With this type of commercial lease, the lease holder does not own the apartment but instead holds the lease to the residential unit.
- Full service lease
- Ground lease
- Oil or gas lease
- Proprietary lease
- Proprietary lease
Margo is the potential buyer of the property in an option contract. Margo is the ______.
Optionee
Grant owns a property that’s subject to an option contract. Grant is the ______.
Optionor
Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who’s the best person to help Cynthia prepare a lease option?
A real estate attorney
Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase that can be exercised within the next two years. What type of contract is this?
- Bilateral
- Executed
- Unilateral
- Voidable
- Unilateral
What’s the purpose of the ECOA?
To prevent discrimination in lending
Kenneth plans to shop around for his mortgage loan to be sure he’s getting the best interest rate and terms. What lender-provided document outlines loan rates and fees so he can make comparisons?
The Loan Estimate permits Kenneth to comparison shop.
The CFPB uses education to accomplish its mission, such as the ______ publications.
Know Before You Owe
Which of the following is part of the Consumer Financial Protection Bureau’s mission of consumer protection?
- Enforce consumer financial protection laws.
- Level discrimination penalties and fines.
- Provide loan programs for first-time homebuyers.
- Provide low fee loans to consumers.
- Enforce consumer financial protection laws.
According to the ECOA, ______.
- An applicant can only be judged by income, net worth, job stability, and credit rating
- Applicants may only be judged by race, income, and job stability
- Certain races are excluded from needing credit ratings
- It only applies to applicants who are over the age of 65
- An applicant can only be judged by income, net worth, job stability, and credit rating
Which of the following criteria may be used by lenders when evaluating a loan application?
- Age, income, and net worth
- Ethnicity, job stability, and credit rating
- Income, net worth, job stability, and credit rating
- Race, income, and job stability
- Income, net worth, job stability, and credit rating
Charlie and Wendy’s monthly expenses look like this: $400 credit card payment (it was a beautiful wedding and honeymoon!) and a $150 payment for a student loan that will be paid off in six months. They’re anticipating a house payment close to $1,500. The couple’s gross monthly income is $6,500. When calculating ratios, the lender doesn’t consider any payments with 10 or fewer payments remaining. What is their current housing ratio?
23.1%
Remember, the housing ratio only looks at payments related to housing, not all expenses. To find this number, divide $1,500 by $6,500. Then multiply by 100 to turn this number into a percentage. We get a hair over 23%.
Now let’s calculate Charlie and Wendy’s total debt ratio using the same information. They have a $400 credit card payment and a $150 payment for a student loan that will be paid off in six months. They’re anticipating a house payment close to $1,500. The couple’s gross monthly income is $6,500. When calculating ratios, the lender doesn’t consider any payments with 10 or fewer payments remaining. What is their total debt ratio?
29.2%
In Charlie and Wendy’s situation, the $150 student loan payment is the only expense not considered as part of this calculation because there are fewer than 10 payments remaining. The sum of the remaining expenses is $1,900. Divide this by $6,500. Then multiply by 100 to get a percentage. Their total debt ratio is 29.2%.
Which party to the loan approval process is responsible for providing the Loan Estimate?
Lender
Front-end ratio is another term for ______ ratio.
Housing
Which of the following describes housing ratio?
- A calculation of a borrower’s monthly housing obligation, including principal, interest, taxes, insurance, and any homeowners or condo association fees, as a percentage of the monthly gross income
- A calculation that describes the amount being borrowed compared to the value of a property
- A calculation that illustrates a borrower’s principal payment compared to interest
- A calculation that looks at all recurring (or installment) debt, such as monthly mortgage, car, credit, and loan payments, as a percentage of the borrower’s monthly gross income
- A calculation that describes the amount being borrowed compared to the value of a property
Which party to the loan approval process evaluates the loan application, the supporting documentation and data, and the property appraisal in order to make an approval recommendation?
Underwriter
A calculation that looks at all recurring (or installment) debt—such as monthly mortgage, car, credit, and loan payments—as a percentage of the borrower’s monthly gross income, is called ______ ratio.
Total debt
Your buyer client asks you the purpose of a financing contingency. Your response should be that it protects _________________.
The buyer
Chris and Nick hope to qualify for an FHA loan. Their lender calculates their housing ratio as 33% and their total debt obligation as 43%. Their credit score is 620. Do they qualify under FHA underwriting guidelines?
No, they don’t meet the housing ratio requirement.
The minimum down payment for an FHA 203(b) loan is ______.
3.5%
Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she’d like to buy a second home using another VA loan. Is Sissy allowed to do this?
Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.
Which of the following is a true statement about borrower qualification standards for a VA-guaranteed loan?
- Every veteran qualifies.
- The applicant must have a certificate of eligibility.
- The applicant must have a certificate of reasonable value.
- Those who received a dishonorable discharge still qualify.
- The applicant must have a certificate of eligibility.
Cathy is hoping to purchase a home using a VA loan. A VA-assigned real estate appraiser is required to provide ______ for the property.
A certificate of reasonable value
Sylvia is shopping for a mortgage. Because she’s a veteran, she compares the VA home loan with the 3.5% down FHA mortgage. If she has only $5,000 available in cash, with all else being equal, which loan will allow her to spend more on a home?
The VA loan
The VA loan has a no down payment feature, so Sylvia could buy a more expensive home, provided she qualifies otherwise.
Which of the following statements is true about buydowns with a VA loan?
- The seller isn’t allowed to pay for a buydown.
- They aren’t allowed.
- They’re allowed only on fixed rate loans.
- They’re limited to two discount points.
- They’re allowed only on fixed rate loans.
A borrower may buy down the interest rate on a fixed rate VA loan, but buydowns are not allowed on ARMs.
______ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses.
Residual income
With a VA loan, the certificate of reasonable value is used to ______.
Determine the value of the loan that the VA will guarantee
Ron and Dawn hope to qualify for an FHA mortgage so they can buy a home for their family. Their housing ratio is 28%, their total debt obligation is 45%, and their credit score is 650. Do they qualify under FHA underwriting guidelines?
No, they don’t meet the housing ratio requirement.
Underwriting requirements for an FHA loan specify a housing ratio of no more than 31%, a total debt obligation that doesn’t exceed 43%, and a minimum credit score of 500, with 620 or higher being preferable.
Which of the following statements is true about the MIP on an FHA loan?
- FHA loans that have shorter terms aren’t required to include MIP.
- The FHA didn’t originally charge MIP on FHA loans.
- The FHA may adjust the percentage used to calculate MIP on FHA loans.
- The percentage of MIP charged to borrowers has been the same since the FHA was created.
- The FHA may adjust the percentage used to calculate MIP on FHA loans.
Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty?
No
The VA loan program offers a basic entitlement amount of ______.
$36,000
Fatima is using a VA loan to purchase a home from Sue. Sue agrees to pay Fatima’s closing costs. Which of the following statements is true?
- Closing costs aren’t considered a seller concession.
- Sue can increase the sale price of the property by the same amount she is paying for Fatima in closing costs.
- Sue is allowed to pay no more than 50% of Fatima’s closing costs.
- This would be a seller concession, and would be included within a 4% limit on seller concessions.
- Closing costs aren’t considered a seller concession.
What type of loan can be obtained with no down payment?
VA
Read through each of the following pieces of information about buyers’ debt obligations and determine which one will qualify for an FHA loan based on the qualifying ratios.
- Housing ratio of 30%, total debt obligations 45%
- Housing ratio of 31%, total debt obligations 40%
- Housing ratio of 34%, total debt obligations 48%
- Housing ratio of 35%, total debt obligations 43%
- Housing ratio of 31%, total debt obligations 40%
The annual MIP is recalculated each year using ______.
The end-of-year loan balance, plus the balance after the next 11 payments
The upfront MIP on an FHA loan is calculated on ______.
The base loan amount
Celeste hopes to qualify for an FHA loan. She calculates her housing ratio as 31%, and her total debt obligation as 42%. Her credit score is 580. Does she qualify under FHA underwriting guidelines?
Yes
John uses the VA home loan to purchase property. His mortgage is $200,000. Then, two years later, John defaults on his loan. How much will the VA reimburse the lender?
$50,000
The VA guarantees one quarter of the loan amount, so the lender in this case will be reimbursed up to $50,000.
Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan?
The lender can consider compensating factors, even if their credit history isn’t great.
How does the VA fund the mortgage guarantee program so that lenders can be reimbursed for any losses from borrower default?
Through a funding fee charged to most borrowers
The funding fee on a VA loan is waived when ______.
The veteran has a 10% or higher VA disability
The funding fee is waived for veterans with qualified disabilities.
Greg is selling his home to a veteran who’s using a VA loan. When the transaction starts to stall, Greg tries to motivate the buyer by including his giant flat screen TV, valued at $1,200, as a gift. Is Greg allowed to do this?
Yes, this is considered an allowable seller concession
When does the need for mortgage insurance end for a borrower who has a VA loan?
There is no mortgage insurance requirement for a VA loan.
One big benefit of a VA loan is that it doesn’t require mortgage insurance even though the borrower is placing less than 20% down (in most cases borrowers make no down payment).
The ______ is provided by a VA-assigned appraiser.
CRV
Which of the following statements is true about the annual MIP on an FHA mortgage?
- It’s amortized and will be the same for every mortgage payment the borrower makes.
- It’s a one-time charge that the borrower may choose to pay at closing or finance into the loan amount.
- It will decrease each year as the loan is paid down.
- It will increase each year as the loan is paid down.
- It will decrease each year as the loan is paid down.
The ______ tells the lender how much entitlement the veteran has available under the VA loan program.
Certificate of eligibility
Nadia uses a VA loan to buy a house for $125,000. She wants to buy the neighboring property, an empty lot, so she can improve the house using the extra land. The lot is for sale for $135,000. Can she use a VA loan for this purchase?
Yes, she should have partial entitlement left.
Which of the following statements about the VA guaranteed home loan program is true?
- Any person who served in the military for any length of time is eligible.
- Only individuals with service-connected disabilities are eligible.
- Only retired service members are eligible.
- The service member’s length of service, duty status, and character of service determine eligibility.
- The service member’s length of service, duty status, and character of service determine eligibility.
Annual MIP can be removed from an FHA loan by ______.
Refinancing to a conventional loan
The annual MIP is paid for the life of the FHA loan and may only be removed by paying off the loan, by selling the home, or by refinancing to a conventional loan.
Sandra is a single woman fresh out of college. She hopes to qualify for an FHA loan. Her lender calculates her housing ratio as 31% and her total debt obligation as 43%. Her credit score is 480. Does she qualify under FHA underwriting guidelines?
No, she doesn’t meet the credit score requirement.
Which of the following statements is true about government loans?
- They originate in the secondary market.
- They’re insured or guaranteed by a government agency.
- They’re serviced by the U.S. Department of the Treasury.
- They’re underwritten by the Federal Reserve.
- They’re insured or guaranteed by a government agency.
The house payment Tim and Vickie are considering would give them a housing ratio of 34% and a total debt obligation of 40%. Their credit score is 640. What do they need to change to meet the underwriting requirements for an FHA loan?
They should look for a home in a lower price range.
Although 640 is an acceptable score for an FHA loan, its underwriting requirements specify a housing ratio of no more than 31%. A less-expensive home might help this couple meet the FHA underwriting guidelines for housing ratio.
Which of the following statements is true regarding closing costs on a VA loan?
- All closing costs are considered part of the funding fee.
- No closing costs may be charged to the veteran.
- Payment of closing costs may be negotiated.
- The loan origination fee is limited to no more than 2%.
- Payment of closing costs may be negotiated.
Closing costs that are charged to the borrower may be negotiated.
Millie and Jerry are purchasing a home using their VA loan benefit. The sales price is $320,000, with 100% financing. Assuming that Jerry has a typical level of entitlement, how much of their loan does the VA guarantee?
$80,000
The VA guarantees up to a quarter of the total loan amount, up to $104,250, so Millie and Jerry’s loan is guaranteed for one-fourth of $320,000, which is $80,000.
A lender qualifies a borrower for a VA loan based on ______.
Residual income and debt-to-income
Which of the following applicants do NOT fall within the guidelines for an FHA-insured loan?
- Beth has a credit score of 610. Her housing ratio is 38%, and her total debt obligation is 43%.
- Gena is a single mom with three kids. Her credit score is 620, her housing ratio is 31%, and her total debt obligations come to 40%.
- Tara has a housing ratio of 29%, and his total debt obligations are at 49%. His credit score is 500.
- Will has a credit score of 650. Her housing ratio is 35%, and her total debt obligation is 41%.
- Will has a credit score of 650. Her housing ratio is 35%, and her total debt obligation is 41%.
FHA requirements may be more lenient than conventional loans, but there are limits.
Kendra is purchasing a home and is ready to find a lender who will give her terms that she can afford. She has done her homework and knows that she can use the ______ to compare loans and find the one that will best meet her needs.
Loan Estimate
Noah’s lender is holding the __________ that he signed.
- Deed of trust
- Equity disclosure
- Mortgage
- Promissory note
- Promissory note
The lender holds the promissory note until the loan is paid off.
Kendra and her real estate agent are preparing to close on the property she’s purchasing on Thursday. Kendra will sign the paperwork with her lender to close on the loan at the same time. When does the lender need to provide Kendra with the Closing Disclosure form?
At least three business days prior to closing on the loan
Kendra has applied for a loan from Acme Savings and Loan, but when she compares the Loan Estimate the loan officer gave her with the one from Best Bank, where she also applied for a loan, she decides she’d rather go with the loan from Best Bank. Which of the following is a true statement about this situation?
- Kendra must advise Acme Savings and Loan that she doesn’t accept the loan that she applied for within three business days of receiving the Loan Estimate, or else she will be liable for the loan origination fee.
- Kendra must respond to the information in the Loan Estimate within 24 hours of receiving it by informing the lender whether she will go forward with its loan.
- The Loan Estimate expires in 10 business days if Kendra doesn’t tell Acme Savings and Loan that she wants to move forward with it.
- The Loan Estimate remains valid for 30 days, and Kendra can accept the loan any time within that timeframe.
- The Loan Estimate expires in 10 business days if Kendra doesn’t tell Acme Savings and Loan that she wants to move forward with it.
The Loan Transfer Disclosure is used to _______________.
Inform the borrower that the lender has sold the loan
Kendra has applied for a mortgage from Best Bank. When is Best Bank required to provide Kendra with a Loan Estimate?
Three business days
Which of the following may cause the Loan Estimate to be revised?
- Down payment amount change, interest rate change, buyer disclosure updated, and property appraisal reveals increase in value
- Income source not verifiable, down payment amount change, switch to fixed-rate loan, and property appraisal not completed
- Interest rate change, switch to fixed-rate loan, down payment amount change, and property appraisal reveals increase in value
- Switch to fixed-rate loan, down payment amount change, loan program discontinued, and property appraisal reveals increase in value
- Interest rate change, switch to fixed-rate loan, down payment amount change, and property appraisal reveals increase in value
How is pre-approval for a loan different from pre-qualification?
Sellers will be more confident in the buyer’s ability to obtain financing if the buyers have a pre-approval instead of pre-qualification.
Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment?
He will pay 1/12 of it monthly with his mortgage payment.
Annual premiums will decrease as the loan balance is paid off; 1/12 of the annual premium will be added to the monthly mortgage payment.
Your buyer, Chet, is a veteran trying to buy a house, but the certificate of reasonable value came in $10,000 lower than the agreed-upon sales price. What can Chet do?
Negotiate with the seller
How would you advise a buyer client who’s unable to make a 20% down payment on a home?
Work with a mortgage broker or lender who can advise you on down payment assistance and loan programs.
The National ______ Housing Alliance has made recommendations for promoting diverse neighborhoods.
Fair
Which of these is illegal: disparate impact or disparate treatment?
They’re both illegal.
You’re attending a speech on the societal impact of fair housing and the speaker, who is an advocate for diversity in communities, begins the speech by asking who benefits from enforcement of fair housing law. Which of these is likely the answer the speaker is seeking?
- Everyone, because diverse communities are stronger communities
- Fair housing enforcement agencies, because their employees need jobs
- Lawyers, because they make money off of lawsuits
- Protected classes, because of the potential for lawsuits
- Everyone, because diverse communities are stronger communities
Which of these landlord policies is discriminatory?
- All residents must show a U.S. birth certificate as part of the application process.
- Max occupancy in an apartment may not exceed fire regulations.
- No barbecue grills are allowed on balconies.
- No skateboards allowed on the historic hardwood floors.
- All residents must show a U.S. birth certificate as part of the application process.
When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?
- State and local law override federal law.
- State lawmakers decide which law prevails.
- The conflicting law is invalidated, effectively removing the law’s requirements.
- The state law may not remove rights granted to citizens under the federal law.
- The state law may not remove rights granted to citizens under the federal law.
Though illegal, discrimination still occurs because ______.
Discrimination is often not visible to the public
What’s the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?
Steering
Which of these is an example of blockbusting?
- A lender withholds mortgage loans in areas considered demographically risky.
- A licensee doesn’t tell her buyer client about a first-floor condo because she felt it wasn’t safe for the client.
- A licensee focuses on showing properties in areas that are demographically similar to her buyer clients’ ethnicity.
- A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she’ll never be able to sell.
- A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she’ll never be able to sell.
Are mobile home parks subject to fair housing laws?
Yes
What are the seven federally protected classes?
Race, color, religion, disability, sex, familial status, and national origin
What discriminatory lending practice by lenders resulted in the destruction of whole neighborhoods, with perfectly good housing left abandoned?
Redlining
Fantasy Home Realty, Surety Mortgage, and AccuTitle Company all have an agreement with one another. Fantasy Home Realty will push buyers toward obtaining financing through Surety Mortgage, and will perform closings using AccuTitle Company. What type of restraint is this an example of?
Horizontal
What will the Federal Trade Commission do if it’s working on a case that involves an allegation of a criminal antitrust violation?
Refer it to the U.S. Department of Justice.
Which act created an agency to investigate antitrust practices?
Federal Trade Commission Act
Two large local brokerage firms agreed to lower their commission rates to the same amount—approximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?
The agreement between the two firms
Which of these is an example of antitrust violations common to real estate?
- Fraud, concealment, and misrepresentation
- Profiteering, racketeering, and domineering
- Puffery, hyperbole, and exaggeration
- Tie-in arrangements, market allocation agreements, and group boycotting
- Tie-in arrangements, market allocation agreements, and group boycotting
An antitrust complaint has been received by the U.S. Department of Justice, and, after review, it’s decided that a formal investigation will be conducted. When must the complainant be notified of the investigation?
Never
A central element of an antitrust violation is _______.
a contract
A state attorney general may recover up to how much in damages (civil penalties) resulting from Sherman Act violations?
Three times the amount of damages
The 1970 case against Prince George’s County Board of REALTORS® involved a consent decree. What is this?
A compromise where the party agrees to stop certain illegal actions without admitting guilt
The 1970 case against Prince George’s County Board of REALTORS® found that the board was refusing to work with members who didn’t follow certain suggestions. What is this an example of?
Group boycotting
One of the actions that landed the Consolidated Multiple Listing service of South Carolina in court was prohibiting members from offering home sellers the opportunity to avoid paying a broker’s commission if the seller located a buyer on their own. What type of antitrust violation does this exemplify?
Price fixing
In the 1950 case involving the District of Columbia’s Washington Board of REALTORS® in which the National Association of REALTORS® became involved, the board required that brokers should maintain the standard rates of commission adopted by the board, and no business should be solicited at lower rates. No member may charge less than this rate when involved in the sale, exchange, lease, or management of real property in the District of Columbia. What were the parties guilty of?
Price fixing
Which of the following is a reason all licensees should have errors and omissions insurance?
- It eliminates risk.
- It provides coverage for all situations.
- Litigation is declining.
- Risk is an inherent part of real estate activities.
- Risk is an inherent part of real estate activities.
Many E&O insurance policies have ownership exclusions. What does that mean?
The policy doesn’t cover claims related to property that the insured or a related party owns or has a financial interest in.
Risk mitigation means ______.
Using a system to reduce the risk’s likelihood or severity
The first part of analyzing risk is to determine the ______ of the risk.
Source
Every identified risk has one or more specific sources of risk. For example, one source of risk in owning your own office building is the financial risk if the building is damaged.
Which of the following benefits does errors and omissions insurance provide?
- Provides coverage for all situations
- Provides coverage for deliberate mistakes
- Provides coverage for licensees who make inadvertent mistakes
- Removes risk from real estate activities
- Provides coverage for licensees who make inadvertent mistakes
Which of the following is true about errors and omissions insurance?
- It covers deliberate fraud.
- It covers licensees sued by consumers for inadvertent mistakes.
- It covers violations of real estate regulations.
- It doesn’t assist with managing risk.
- It covers licensees sued by consumers for inadvertent mistakes.
Which of the following actions poses the greatest risk for your brokerage?
- Developing a thorough policies and procedures manual
- Developing company checklists for all licensees to follow
- Not penalizing staff who don’t follow policies or procedures
- Requiring all staff to carry E&O insurance
- Not penalizing staff who don’t follow policies or procedures
Errors and omissions insurance is an important way to do what?
Manage risk
______ is the method firms use to determine what risks they face.
Risk identification
Which of the following statements is true regarding risk identification?
- It involves analyzing the level of exposure associated with risks the firm faces.
- It involves reviewing every aspect of the firm’s operations to determine what risks each poses.
- It’s the final step in risk management.
- It’s the process of categorizing financial risks of various investments.
- It involves reviewing every aspect of the firm’s operations to determine what risks each poses.
What do errors and omissions insurance providers commonly require a brokerage firm to have in place before they will issue the insurance policy?
A policies and procedures manual
In addition to a statement of equal opportunity and a reminder that unlawful discrimination of any type will not be tolerated, policies and procedures manuals should include a ________________________.
Review of the fair housing law and the Tennessee Human Rights Act
Why is it important that brokers regularly review the contents of the policies and procedures manual, make updates when required, and communicate and train the members of the firm on any critical changes?
They want their licensees to know how they should be conducting business on behalf of the firm, what they should and should not do, and why.
To help ensure compliance and provide better protection for the broker against claims that there was no expectation of adherence to the policies and procedures in the PPM, what must a broker do?
Actively enforce the PPM.
You attend a business-related conference that includes an overnight stay away from home. Can you deduct the cost of your meals during the conference?
Yes, you can deduct 50% of the cost of your meals
Travel expenses are deductible, but only 50% of the cost of meals can be deducted. Your tax professional can make sure these details are properly filed for the IRS as long as you keep the proper records.
How long must licensees retain real estate transaction records?
Three years
Which of these items do principal brokers in Tennessee need to retain?
- Leases
- Property disclosure forms
- Transaction broker agreements
- Transaction broker agreements, property disclosure forms and leases
- Transaction broker agreements, property disclosure forms and leases
Good record retention is one way to ______ risk.
Manage
Rhonda is a Tennessee affiliate broker. She decides to keep all of her transactional records in electronic format. This means that Rhonda ______.
- Is breaking the law
- Is committing an ethical breach
- Must be able to produce them within 24 hours
- Must include off-site hard copies as well
- Must be able to produce them within 24 hours
If this is obvious, it can signal a vacant property.
Staging
In the real estate business, whose primary role is to manage properties for others?
Property manager
One consistent influence on real estate market trends is the government’s ______.
Fiscal and tax policies
Rod has been doing some research and talking with his broker friends and has decided to move his firm in a different direction. He’s going to reinvent his firm as a flat fee brokerage. What current real estate industry trend is this an example of?
Adoption of new business models
How does an awareness of trends in the real estate market help a licensee remain successful?
It allows the licensee to take advantage of opportunity.
Nat has a friend who’s in the home construction business, and he says that in the last six months, there’s been an increased demand from developers to build homes that are more energy efficient and use sustainable, non-toxic building materials. What current market trend is this an example of?
Greener buyers
Because these types of properties have both specific physical and complex operational requirements, they are usually handled by more experienced real estate professionals.
Industrial
How are foreclosures and auctions related?
Foreclosure properties will go to auction before being purchased by a buyer or a bank.
What’s required in order to call an auction?
An auctioneer’s license
Alec is considering investing in an older, but charming single-family home, then renovating the home by adding multiple kitchens and bathrooms. What type of investment opportunity is Alec contemplating?
A conversion
Alec is looking at converting a single-family home into apartments. Renovating the home is often less costly than starting from scratch, and he may be able to command higher-than-usual rents due to the home’s character and charm.
One advantage residential properties have for investors over commercial properties is that residential properties _______.
Are relatively liquid
The buy-and-hold investor enjoys appreciation potential, tax write-offs, and ______.
Current income
Which of the following is an advantage to investing in a single-family home rental?
- Ability to depreciate an appreciating asset
- Economy of scale
- Landlord responsibilities and tenant relationships
- Vacancies
- Ability to depreciate an appreciating asset
Greg tries hard to reduce his carbon footprint, so he doesn’t own a car. He’s able to do all his shopping at stores on the same street where he lives, and takes a convenient train to his office for work. What type of community does Greg likely live in?
Mixed-use with transit-oriented design
Congratulations! The crowd funding worked. Now you can start manufacturing your own line of yoga clothing. But first, you need a location to do all of that sewing. Which building would you select?
Light manufacturing
Which of the following is an example of a leisure property?
Motel
Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That’s probably because Blane’s store is in which type of location?
Strip mall
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?
- Appraisal
- Cost
- Price
- Value
- Price
A local buyer is purchasing a property for $120,000. What will the seller pay in transfer tax if the rate is $.37 per $100?
$444
In this situation, the transfer tax rate is $0.37 per $100. This is the same thing as .0037, which makes it easy to multiply. Multiply the transfer tax (.0037) by the value of the property ($120,000).
Which of these is a potential title issue with a foreclosure?
- Clouds on title
- Delays due to internal title audit
- Homeowner’s right of equitable redemption
- Lengthy closing process
- Clouds on title
Johnstone’s Realty is a new discount, menu-based brokerage firm. Its approach usually results in a lower listing commission rate than other firms offer. Johnstone’s also offers a lower cooperating brokerage split than most other firms. Business is booming for Johnstone’s, and the remaining firms in town are concerned. These brokers agree to not show Johnstone’s listings to their buyer clients. What is this an example of?
Group boycotting
Which of the following can be defined as what a property is worth?
- Appraisal
- Cost
- Price
- Value
- Value
What’s a typical prepaid item that will go into a seller’s credit column and a buyer’s debit column on a closing statement?
Property taxes
Liam is a contractor who discloses his right to place a lien on the properties where he works in the event of non-payment. What type of lien is this?
Mechanic’s
John’s property is shaped like a triangle. The street side is 185 feet, and from the street to the longest point of the triangle is 225 feet. How do you calculate the square footage of John’s property?
Multiply 185 by .5; multiply your answer by 225.
You can calculate the area of a triangle in several ways. One way is to multiply the triangle’s base measurement by .5, then multiply that answer by the triangle’s height [(185 × .5) x 225].
Which of the following is an example of commingling?
- Mixing earnest money with personal funds
- Mixing two earnest money deposits
- Paying licensee bonuses from forfeited escrow deposits
- Using escrow funds to pay business expenses
- Mixing earnest money with personal funds
Which legislative act prohibits certain types of electronic communication?
CAN-SPAM
The Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) prohibits junk email and requires an “unsubscribe” option in any email marketing messages.
Which of these is NOT an example of a group boycott?
- Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide not to show any of Acme’s listings and to prohibit showings to Acme buyers so they can drive Acme out of business.
- Deb, a licensee, is unhappy with the marketing materials a local company produced. She shares her concerns with Irving, a colleague, and they agree to avoid doing business with this company—and to share the news with other colleagues.
- Sean and the associated brokers in his firm agree to purchase their marketing materials from a single supplier so they get a quantity discount.
- Several brokerages in a certain area agree to stop running advertisements in a local publication.
- Sean and the associated brokers in his firm agree to purchase their marketing materials from a single supplier so they get a quantity discount.
To protect your commission, a listing agreement should be ______.
In writing
Talking the consumer into refinancing over and over so a lender can charge fees is ______.
Loan flipping
Which fiduciary duty requires agents to handle their clients’ funds and paperwork properly?
The duty of accounting
Which one of the following could be a clue that a property was formerly a waste disposal site?
- Birds constantly on the property
- Plate covering an oil fill area
- Scorch marks on trees surrounding the area
- Soft spots, mounds, and discolored soil
- Soft spots, mounds, and discolored soil
Roxanne just finished making a buyer presentation to Fred and Regina Jones. Now that they understand the difference between being customers and being clients, they’re anxious to be represented. What is one of Roxanne’s duties to them as their buyer’s agent?
Finding properties to show to Fred and Regina
Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?
- Termination by division
- Termination of co-ownership by partition
- Termination of estate in severalty
- Termination of joint tenancies
- Termination of co-ownership by partition
Termination of tenancy in common by partition allows each tenant to have a specific, divided portion of the property exclusively. If the property can’t be divided, the court may rule that the property be sold and the proceeds divided by the tenants.
A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What’s the amount of the loan origination fee if the lender charges one-and-a-half points?
$6,750
Which of the following could be an indication of a foundation problem?
- Crack in a basement wall
- Doors that open and close easily
- Lack of moisture in the basement
- Windows that open and close properly
- Crack in a basement wall
Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?
Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.
Sam decided to build a swimming pool in his yard. He built it one foot inside his neighbor’s property. What is this an example of?
Encroachment
Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?
- Lot and block
- Metes and bounds
- Monument and benchmark
- Rectangular government survey
- Rectangular government survey
Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.
Alice owned a double lot on the waterfront. She sold the lot to Ronesha and included a deed restriction prohibiting construction of any building taller than one story. Ronesha wants a three-story house. What should she do?
Conform to the deed restriction.
What’s one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties?
Loyalty
Tom and Rosanne are interested in a property, but before making an offer, they want to make sure there aren’t any registered sex offenders living in the neighborhood. Which statement is most accurate?
- It’s up to the buyer to perform due diligence and research whether sex offenders live in the area. Licensees can direct clients to the state’s registry.
- Sex offender information is not public, and a seller is not required to disclose it.
- The licensee must research the neighborhood to determine if there are any registered sex offenders.
- The seller must disclose the location of any nearby sex offenders.
- It’s up to the buyer to perform due diligence and research whether sex offenders live in the area. Licensees can direct clients to the state’s registry.
Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a ______ contingency, which is generally the most risky.
Home sale
The Slathertons are looking at buying a $300,000 property with a 20-year loan at a 6% interest rate. How much would their monthly principal and interest amount be? Plug in the numbers using the amortization chart in your resources to see what the payment per month would be. (Use the amortization chart your lesson instructed you to print out.)
$2,149.30
Cheryl and Roberto just signed a contract for Cheryl to buy Roberto’s house for $235,000. Roberto owes $48,750 on his current mortgage, he’s going to replace the old furnace ($800), he’s agreed to pay 3% toward closing costs, and he’ll pay a 6% commission to his agent. How much in whole dollars will he have left to put down on the condo he wants to buy?
$164,300
Roberto’s closing costs will be $7,050 ($235,000 x 0.03) and commission will be $14,100 ($235,000 x 0.06). Subtract those two amounts, the furnace cost ($800), and the mortgage loan payoff ($48,750) from $235,000 to get $164,300.
Which of the following is true regarding the definition of agency?
- Agency describes a collaborative effort between multiple parties or units.
- Agency describes the relationship between the real estate professional and the person or persons being represented
- Agency describes the relationship between the seller and the buyer in a real estate transaction.
- Agency is the legal term used for a real estate licensee.
- Agency describes the relationship between the real estate professional and the person or persons being represented
Agency is the special relationship that only exists between a real estate professional (as the agent) and the client under an agency agreement. Agency does not exist between licensees and customers.
Which of the following is a reason a lender might charge a prepayment penalty?
- Because the lender is a subprime lender
- To cover the costs of processing an early payoff
- To deter buyers from ever paying off their mortgage
- To recover the money lost in anticipated interest
- To recover the money lost in anticipated interest
Why did the implementation of TRID impact closing dates?
- Certain financing changes may trigger a new three-day waiting period.
- Lenders must give buyers five working days to review the Closing Disclosure.
- Once the Closing Disclosure is issued, the loan underwriter must perform a final review and approval.
- The complexity of the forms makes them more time-consuming to complete.
- Certain financing changes may trigger a new three-day waiting period.
Increases in the annual percentage rate, the addition of a pre-payment penalty, or changes to the basic loan product require that the lender issue a new Closing Disclosure, necessitating a new three-day waiting period.
Leases may be terminated by expiration, eviction, or ______.
Mutual agreement
As a licensee, you’ll have several tasks you must perform for your buyer client. One of these tasks is to ______.
- Coach the buyer on how to negotiate the terms of the sales contract to be completely in the buyer’s favor
- Explain to the buyer why it’s unnecessary to have a professional inspection done on a new home
- Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
- Show properties the buyer might qualify for if he would put down more earnest money
- Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
The primary purpose of the Real Estate Settlement Procedures Act is to ensure that buyers ______.
Know all settlement costs up front
The Graysons just closed on their new home. They move in tomorrow. What type of contract do the Graysons have?
Executed
Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step?
Arbitration
Warranties will detail the course of action if a claim is disputed. Most often, mediation occurs first, then arbitration. The arbitration decision is generally binding and final. The disputed claim process seeks to avoid or limit litigation.
You’re working with buyers who are pre-approved for a loan of as much as $200,000. Assuming they lock in a 5.25% interest rate at closing, how much of their first payment will go toward interest?
$875
The formula is loan balance × interest rate ÷ months per year. Loan balance is: $200,000 × .0525 = $10,500; $10,500 ÷ 12 = $875
If an appraiser has found the value of a property to be $250,000 using a cap rate of 10%, what was the property’s net operating income?
$25,000
Because Shelby has a high prepayment penalty on her high-interest loan, she is ________.
Unable to refinance her high-interest subprime loan without paying a stiff penalty
The loss in value caused by deterioration in physical condition is called _______.
Physical depreciation
Related to the legal description of land, what’s a monument?
A permanent land marker sometimes used in legal descriptions
Which of the following is a potential disadvantage for a buyer who enters into a lease with an option to buy contract?
- The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease’s terms.
- The buyer/lessee has to pay higher federal capital gains taxes if purchasing a property through a lease with an option to buy transaction.
- The buyer/lessee has to wait until the property owner is ready to sell the property before he can take possession of it.
- The buyer/lessee is unlikely to qualify for a regular mortgage if he decides to move or buy another property later.
- The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease’s terms.
In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?
10 years
Chip is a residential and commercial agent. His friend asks him to list his cattle ranch for sale, but Chip’s never listed an agricultural property before. How should Chip handle this listing so he can still work for his friend but also not work outside his area of expertise?
- Disclose to his friend that he’s not an agricultural expert and ask his friend’s permission to work with an agricultural expert in his firm.
- Refer the listing to an agricultural agent and ask his friend to keep him informed of the transaction’s progress.
- Take the listing and apply commercial real estate practices, since agricultural sales are similar to commercial sales.
- Turn down the listing, citing his lack of experience in agricultural work.
- Disclose to his friend that he’s not an agricultural expert and ask his friend’s permission to work with an agricultural expert in his firm.
Chip could turn down the listing or refer the listing to a more experienced agent. If he wants to work the listing for his friend, he should disclose his lack of experience to the client and ask permission to partner with an ag expert at his firm.
Greta is working with agent Brandon to sell some property. Nelson represents the buyer, Rigby. Of these four parties, who will pay the earnest money?
Rigby
Citytown officials know that they have an abandoned factory site that has been identified for cleanup under CERCLA. When city officials tried to trace the ownership of the property, they found several shell corporations but can’t determine which individual or corporate entity actually owns the property. What is a likely outcome of this situation?
Citytown will apply to the CERCLA trust fund for cleanup costs.
Gladys and her husband, Ralph, owned their home as joint tenants. After Ralph died, Gladys owned the home in severalty. When she dies, which of these will happen to her home?
- Her heirs, as described in her will or according to state law, will receive the property.
- Her home will transfer automatically to a co-owner.
- The property will have no owner and must be sold at auction.
- The property will revert to a remainderman.
- Her heirs, as described in her will or according to state law, will receive the property.
In which of these situations is Ronna’s fiduciary duty of reasonable skill and care at odds with her duty of obedience?
- Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
- Ronna’s buyer client asked her to keep his financial situation confidential.
- Ted, Ronna’s broker, insisted that she teach a contracts class, even though she’s a new agent.
- Though her customer was adamant, Ronna turned down a commercial listing because it was outside her area of expertise.
- Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
While Martha’s paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?
A promissory note
Identifying the purpose of the appraisal leads the appraiser to do what next?
Identify data needed
_______ is the principle that the more similar properties there are on the market, the lower the price will be driven.
Competition
In general, a person in a position of loyalty and trust is a(n) ______.
Fiduciary
Marge works for Morgan Realty as a transaction coordinator. Which of these factors may cause the IRS to classify Marge as an employee?
- Marge is required to belong to the local REALTORS® association.
- Marge works the hours she chooses.
- The firm doesn’t provide any benefits to Marge.
- The firm pays Marge a salary.
- The firm pays Marge a salary.
Which fiduciary duty may continue even after the transaction closes?
The duty of accounting
The duty of accounting continues even after the transaction closes. For instance, any money the agent holds after a transaction closes must be accounted for until it’s delivered to the appropriate party.
In completing a CMA, finding a comparable (competitive) property that had a quick sale may indicate which of the following?
- It’s a buyer’s market.
- The market for similar homes is good.
- The other agent was incompetent.
- The property was priced too high.
- The market for similar homes is good.
A CMA or a BPO is an example of ______.
An informal estimate of market value
Roy purchased a newly constructed home with a warranty that covers major structural defects for 10 years, and systems (HVAC, electrical, plumbing) for three years. After living in the home a few months, Roy notices the following defects and submits them all. Which one will likely be covered by the warranty?
- A baseboard with paint drips
- A light fixture that doesn’t match other light fixtures in the home
- A split ceiling joist in the basement
- A tear in the carpet
- A split ceiling joist in the basement
Ken, a licensee, has published an ad claiming that he can sell homes for 25% more than any of his competitors. The Federal Trade Commission determined this to be a deceptive ad. What might the FTC require Ken to do as a penalty for his deception?
Take out new ads correcting the misinformation in his original ad
The FTC may impose informational remedies designed to help consumers understand the deception that occurred. Ken will likely be required to take out new ads to correct the misinformation. He may also be required to include a disclosure in future ads.
Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called ______.
An act of waste
Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?
Easement by prescription
The Richards family farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Buyers in the area looking for a move-in ready home would need to either look elsewhere or wait several months for the home to be renovated. Which factor is most negatively impacting the value of the Richards’ property?
- Demand
- Scarcity
- Transferability
- Utility
- Demand
Although large parcels in the area are scarce, the low demand of buyers willing to buy and wait to live in a property that needs significant repairs is affecting the value.
When you use a comparative market analysis to calculate a suggested listing price range for a particular property, which of the following actions will you take?
- Adjust prices from all properties listed or sold within a one-mile radius of the subject property.
- Calculate price range based on data from expired listings and pending sales.
- Use adjusted prices from comparables and refine a range using active listings, expired listings, and possibly pending listings.
- Use the prices of sold comparables and active listings, adjusted for time listed.
- Use adjusted prices from comparables and refine a range using active listings, expired listings, and possibly pending listings.
Although having information on all of these will assist in determining where in a price range an appropriate list price would be, only recent sales of comparables should be used to calculate the price range for the CMA.
What’s one benefit of a rural development loan?
- It doesn’t have to be repaid.
- It includes marketing assistance for farmers.
- Its optional longer term means a lower monthly payment.
- Its optional shorter term means a quicker payoff.
- Its optional longer term means a lower monthly payment.
Residents of Tinytown have been complaining to town officials that the village-like character of their town is being affected by the medium-rise condos that developers are building on the edge of town. In response, local government officials rezoned the areas on the edges of town as parklands. What type of zoning is this?
Downzoning
Downzoning assigns a lower density use to an area that previously allowed a higher density.
Leases can end in several key ways. Mutual agreement and eviction are two. What is another way that a lease can terminate?
Expiration
Most often, what’s the first course of action for disputed home warranty claims?
Mediation
Seth is a licensee representing seller Dora. Which of these items is Seth required to disclose to prospective buyers about the property?
- Dora doesn’t use the back door because the steps leading to the yard are rotted.
- Dora keeps sunflowers planted in the back yard because the local birds can eat the seeds.
- The neighborhood kids like to ride their bikes in Dora’s driveway.
- The pink geraniums in the window boxes are fake.
- Dora doesn’t use the back door because the steps leading to the yard are rotted.
Which of these situations is addressed by the fiduciary duty of disclosure?
- The buyer fails to disclose to the seller his need to close on the property quickly.
- The buyer’s home inspector refuses to share the inspection report with the seller.
- The seller refuses to complete a property disclosure form.
- The seller’s agent fails to disclose a conflict of interest.
- The seller’s agent fails to disclose a conflict of interest.
The fiduciary duty of disclosure relates to the licensee’s responsibility to disclose material facts and conflicts of interest.
Which of these is NOT a likely features of a bridge loan?
- Amortized loan paid back over a period of no more than five years
- Interest-only loan
- Secured by the borrower’s existing home
- Temporary, short-term loan
- Amortized loan paid back over a period of no more than five years
A bridge loan is usually a temporary, short-term interest-only loan secured by the borrower’s existing home.
Bo’s real estate ad states: “Custom homes for sale with scenic mountain views. Easy financing and low down payments.” What else must be included in the ad in order for it to comply with TILA?
Nothing
Under TILA, ads that mention general financing terms, such as “low down payment” or “easy financing,” do not require additional disclosure. If Bo had gotten more specific (e.g., “10-year loan with 0% down”) he would need to include more information.
Margaret has an L-shaped living room. How would you calculate the area of this room?
Divide the room into two rectangles, calculate the area of each, and add those together.
Which of these areas would be included in the livable area calculation?
- A detached garage
- An attached garage
- An unfinished attic area with seven-foot ceilings
- A pool house connected to the house by a hallway
- A pool house connected to the house by a hallway
Easements are a type of encumbrance that can affect a property. Which of the following is true about easements?
- An easement is a right acquired by one party to use the land of another party, usually for one day.
- An easement requires the property owner’s express permission.
- Easements are often established by a written agreement between the parties.
- They are always permanent.
- Easements are often established by a written agreement between the parties.
Savvy’s buyer client made an offer on a property but is having second thoughts. Savvy tells her client that she’ll ask the seller’s agent for an extension on the inspection period “to gather more bids,” and use that time to look at other properties to avoid losing out on the current property. Savvy’s client found a property she liked better, so they made an offer. The offer was accepted, so Savvy contacted the first property’s agent to terminate that offer. Is this wrong?
Yes, she did not treat the other party honestly, or act in good faith.
Select the statement that correctly exemplifies the covenant term.
- The covenant against encumbrances is the grantor’s guarantee that he or she owns the property being conveyed.
- The covenant for further assurances assures the grantee that there are no undisclosed encumbrances on the property.
- The covenant of quiet enjoyment promises that the grantee won’t be disturbed by a title defect the grantor passes on.
- The covenant of warranty promises that the grantor has the capacity to convey title.
- The covenant of quiet enjoyment promises that the grantee won’t be disturbed by a title defect the grantor passes on.
The covenant of quiet enjoyment promises that the grantee won’t have his enjoyment of the property hampered by claims against the title.
Along with property ownership, rights are granted to use the land’s physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals?
Sub-surface
What factors does the underwriter consider in reviewing a mortgage loan application?
Credit, capacity, and collateral
Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he’s placed on it, though his agent told him it’s underpriced. Rex’s distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn’t legally competent to manage his business affairs; the judge agrees. What’s the status of the listing agreement?
The listing agreement is terminated by force of law.
Which of the following would NOT likely be a location issue of concern to buyers?
- The house sits in a historic preservation district.
- The house was built in 1985.
- The property borders a wetland.
- The property sits in a flood plain.
- The house was built in 1985.
Which of the following is most likely to establish workmanship standards when someone is building an addition to their property?
- Building code
- Planning commission
- State regulations
- Zoning ordinance
- Building code
Almanzo is buying a horse farm for $695,000 and put down 15% in earnest money. His closing costs and down payment total $139,000. How much will he need to bring to closing?
$34,750
Which of these is an example of legal single license dual agency?
- You represent both the buyer and seller in a single transaction with appropriate consent from both.
- You represent the buyer and a colleague from your firm represents the seller.
- You represent the seller and a colleague from another firm represents the buyer.
- You represent the seller and a colleague from your firm represents the buyer.
- You represent both the buyer and seller in a single transaction with appropriate consent from both.
Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease, and the other an absolute net lease. Why is his attorney arguing against the latter?
An absolute net lease has no legal defenses if Simon fails to pay.
Simon has absolutely no legal recourse with an absolute net lease. Simon is still on the line for payment, even if the building is damaged or destroyed through no fault of his own.
A deed states, “For love and affection, the receipt and sufficiency of which is hereby acknowledged.” What does this statement represent in the deed?
Consideration
A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.
Loan-to-value
LTV ratio describes the amount being financed or borrowed compared to property value (sales price or appraised value), whichever is less.
Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law?
- Disclosing in writing to all parties in a transaction that the licensee isn’t a licensed attorney, so there’s no licensee liability
- Having a designated broker review and notarize all completed contracts
- Having a designated broker write all contracts from scratch to make them specific to each transaction
- Using approved fill-in-the-blank forms
- Using approved fill-in-the-blank forms
As a licensee, one way you can avoid inadvertently being accused of unauthorized practice of law is to use approved, fill-in-the-blank contract forms, and to always include an attorney review clause.
Which of the following duties are owed to customers and other parties to a real estate transaction?
- Fairness and loyalty
- Honesty and fairness
- Honesty and obedience
- Obedience and loyalty
- Honesty and fairness
Customers and other parties are owed the duties of honesty and fairness. Licensees must also disclose all material facts to these parties.
What’s the role of the mortgage contingency in a sales contract?
Document the type of and timeline for financing, and outlines what to do if financing falls through.
Kiley Ann is thrilled to have her real estate license and to be hired on at New Beginnings Brokerage. She’s not positive about Luis, her employing broker, though. He seems a little sketchy. For example, when she looks at her independent contractor agreement, it says that she’s not entitled to unemployment insurance and has to pay her own income taxes. What should she do?
Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance.
Jim represents Joel in the sale of Joel’s country acreage and house. Jim’s business partner, Rolly, informed Jim that he wants to put an offer in to purchase the property, with the intention to subdivide it. Which statement best represents the disclosure requirements regarding this transaction?
- Because Jim isn’t buying the property for himself, he has no disclosure requirements.
- Jim may disclose that he’s partners with Rolly, only if Rolly agrees.
- Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property.
- Rolly must disclose that he and Jim are business partners.
- Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property.
It’s January, and the pool at Roger’s listing has been prepped for winter for several weeks. The homeowner assures Roger that it’s in good working order. Roger has no reason to disbelieve the homeowner, so he tells prospective buyers that the pool is fine. The property sells, spring comes, and the new owners call to complain that the pump doesn’t work, and the pool drain appears to be clogged. What did Roger commit?
Unintentional misrepresentation
Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier’s issue?
- Xavier is guilty of commingling.
- Xavier is guilty of commingling and conversion.
- Xavier is guilty of conversion.
- Xavier is guilty of theft.
- Xavier is guilty of commingling and conversion.
Because Xavier’s balance fell below the amount required to cover the earnest money check, he’s guilty of both commingling and conversion, even though he replaced the funds.
When a licensee is working with a property located near a Superfund site, what does that mean?
The licensee must disclose the existence of an environmental hazard in the area.
Developer A has a project planned that does not conform to the community zoning regulations and wants to make a change request. Which local land use group would the developer ask, and for what?
The zoning board of appeals for either a variance or a special use permit
How are principal meridians and baselines used in the rectangular government survey system?
Each legal description in this system originates at the intersection of a principal meridian and a baseline.
A 4-bedroom, 4-bath 4,875 square feet house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house?
$86.72
Which of the following is a true statement about police power and public land use controls?
- Government agencies may exercise police power only when it does not restrict the freedom of its citizens.
- Local governments and their planning boards control budgeting, site-plan review, and building codes.
- Planning, zoning, and subdivision development are primarily controlled at the state level.
- Police power is citizens’ rights to police themselves.
- Local governments and their planning boards control budgeting, site-plan review, and building codes.
When a property owner wishes to convey her property to a new owner, she will generally use a ______.
Deed
Which of these regarding the impact of the Brownfields Law is true?
- The Mesmer family has discovered petroleum contamination on a site they just purchased. The Brownfields Law holds both them and the previous owner jointly responsible for cleanup.
- The Rodriguez family purchased a property that was formerly a commercial dry cleaner. They plan to convert the property to a residential dwelling. The Brownfields Law requires that the Rodriguez’s be held accountable for any contamination on the property.
- The Smiths have discovered chemical contamination on the property deed to them by their late parents. The Brownfields Law may provide funds to help them clean up the site.
- The Tennyson’s purchased a property that they later discovered was contaminated with methamphetamine waste. The Brownfields Law limits their liability since they were unaware of the contamination when they purchased the property.
- The Smiths have discovered chemical contamination on the property deed to them by their late parents. The Brownfields Law may provide funds to help them clean up the site.
Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan’s property. Stan filed a civil legal action against Emile. What will the court use to determine the actual lot line?
Legal descriptions of both properties
A lot measuring three-fourths of an acre is for sale. How many square feet is this?
32,670
One of the following licensee’s actions would constitute commingling. Which is it?
- Cynthia deposited her client’s earnest money check into the firm’s operating account.
- Jenson deposited his client’s earnest money check into the firm’s trust account.
- Jessica deposited her commission check into her brokerage firm’s operating account.
- Sean withdrew funds from the firm’s operating funds to pay the firm’s office rent.
- Cynthia deposited her client’s earnest money check into the firm’s operating account.
The Millers moved to a small town and were interested in buying a house. At the first meeting with real estate sales professional Nora, she asked them where they went to church. They replied that they were atheists and didn’t attend church. Nora then told them that she didn’t know of any listings that met their needs, even though that wasn’t true. Nora is discriminating based on _______.
Religion
Which of these situations would be exempt from most provisions of the federal Fair Housing Act?
- A homeowner engages a real estate professional to rent out his basement apartment.
- An investor owns and rents out five duplexes.
- A non-profit owns 20 properties that it only rents to Caucasian families.
- The local Elks club owns a property that’s rented only to Elks club members.
- The local Elks club owns a property that’s rented only to Elks club members.
Jackie was sued in civil court by one of her creditors. As a result of the judgment against her, her house, car, and art collection are all subject to sale in order to pay the creditor. What type of lien is this?
General
When the lender gathers all kinds of information about the borrower’s assets, debts, income, employment history, and pulls their credit report, the buyer is ___________________.
Making an application for a loan
Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes?
$1,759.50
Basement wall cracks and leaks can be indicators of ______ problems.
Foundation
Which of these statements accurately describes finance- and housing-related legislation?
- As a stipulation of the Housing and Community Development Act, lenders must offer reasons when rejecting loan applications and must respond to all applications within 30 days.
- The Americans with Disabilities Act added familial status and disability (both physical and mental) to the existing protected classes.
- The Equal Credit Opportunity Act of 1974 required lenders to provide consumers with equal access to credit and prohibited credit discrimination based on just the three protected classes of race, color, or national origin.
- The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
- The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement?
The closing agent
Which act was the first to prohibit any exceptions for discrimination based on race or color?
- Civil Rights Act of 1866
- Fair Housing Amendments Act of 1988
- Federal Fair Housing Act of 1968
- Housing for Older Persons Act of 1995
- Civil Rights Act of 1866
Unique among anti-discrimination law, the Civil Rights Act of 1866 recognized all U.S.-born persons as citizens and allowed no exceptions for discrimination based on race or color.
The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?
- Color
- Disability
- Religion
- Sex
- Sex
The Housing and Development Act of 1974 added sex as a protected class, which helped prevent discrimination and sexual harassment for individuals seeking housing.
Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?
A land contract
With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.
Marion gave her granddaughter Sheila the deed to a brand new home, on the condition that Sheila complete her PhD in astronautics. When Sheila dropped out of school and got a job as a greeter at a big box store instead, Marion ______ to regain ownership of the property.
Had to take legal action
The estate granted to Sheila describes a fee simple subject to a condition subsequent, since it uses the phrase “on condition that.” Marion’s right of reentry requires her to take legal action to regain ownership if the condition is violated.
How does title insurance affect the lender?
It protects the lender from loss due to defective titles.
An easement dictates that property owner A gives the right to property owner B to use a portion of the property. Which term describes property A?
Servient estate
Property A is the servient estate. It serves the dominant estate, Property B.
Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached?
- Against encumbrances
- Quiet enjoyment
- Right to convey
- Seisin
- Against encumbrances
The previous property owner failed to disclose to Li Meng that there was an easement (which is an encumbrance) across the property.
In which of the following scenarios can landlords enter a rental unit without notice?
- The landlord must perform routine maintenance.
- The lessee is not home.
- The tenant in the unit below reports water coming through the ceiling from the apartment.
- The tenant is a day late in paying rent.
- The tenant in the unit below reports water coming through the ceiling from the apartment.
In full seller disclosure states, whose responsibility is it to fully disclose all items on a seller disclosure form and any known material defects not listed on the form?
Seller
A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a 1% loan origination fee. How much is the loan origination fee?
$3,200
In what way is a townhome similar to a single-family detached home?
Ownership includes both the structure and the land.
The owner of a six-unit apartment building is worried that there may be some electrical issues. The owner’s leasing agent, Katrina, meets with him to discuss his concerns. What’s her responsibility to the owner?
Advise him to consult an expert.
Sue and Jim are hoping to expand their family, which means moving to a larger home. They’re closing on their new home soon, but haven’t yet sold their current one. Which type of loan will help them afford both homes for a short period of time?
Bridge
When the listing agreement’s purpose has been fulfilled, what happens to the agency agreement?
The agency agreement terminates by completion.
If you see sawdust that can’t be explained, it’s probably a sawdust-like material called frass created by which pest?
Carpenter ants
Frass is created by carpenter ants when they burrow through wood.
Clint is interested in making an offer on a house with hardwood floors that will need to be replaced. The hallway is 18’ x 6’. The kitchen is 20’ x 30’. The living room is 25’ x 45’. Two bedrooms are 12’ x 16’, and the master bedroom is 14’ x 20’. If the cost of the flooring is $5.48 per square foot, and the cost of installation is $1.49 per square foot, how much can Clint plan to spend to replace the floors?
$17,404.09
First, find the area of each room and add them together to get the total square footage. 108 + 600 + 1125 + 192 + 192 + 280 = 2,497 square feet. The total cost of the flooring per sq. ft. is $5.48 + $1.49 = $6.97. 2,497 x $6.97 = $17, 404.09.
The Gomez family just moved into their dream home. They purchased the home for $264,985, and it appraised at $272,402. The assessment ratio for their area is 25%, and the tax rate for their area is 2.8%. What is their annual tax bill?
$1,907
Margaret is meeting with James and Cindy, potential buyers of a property listed by one of Margaret’s colleagues. They’re in Margaret’s office preparing their offer when James says, “The only thing that bothers me are those black spots on the bathroom ceiling. Do you think that could be the bad kind of mold? It’s not dangerous, is it?” What should Margaret do?
Refer James and Cindy to a qualified mold professional.
Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tell Ed that they thought inspections were only for older homes. How should Ed respond to that?
He should remind them that every dwelling, no matter the age or size, should have a home inspection.
Which of the following is true about ownership or title to a property?
- Constructive notice to the public of real property ownership occurs when the deed is recorded.
- The last to record has priority.
- The seller is responsible for paying for owner’s and lender’s title insurance.
- Title isn’t finalized until the deed has been recorded.
- Constructive notice to the public of real property ownership occurs when the deed is recorded.
Recording and possession give the public constructive notice that ownership has changed hands. It also protects the buyer from others’ claims on the property.
Corinne, an escrow agent, is preparing for the Thomas/Trenton closing in four days. Which of these documents will Corinne prepare?
- She’ll prepare a seller net sheet to disclose the seller’s net profit on the sale.
- Working with the lender, she’ll prepare the Loan Estimate, which details the costs the buyer and seller will pay at closing.
- Working with the lender, she’ll prepare the settlement statement, which details the costs the buyer and seller will have at closing.
- Working with the title company attorney, she’ll prepare the preliminary title commitment.
- Working with the lender, she’ll prepare the settlement statement, which details the costs the buyer and seller will have at closing.
Kelvin isn’t sure how to read this legal description, but his agent said something about reading it from right to left. Here’s the description: “The north half of the northwest quarter of Section 6, Township 8 North, Range 68 west of the 5th principal meridian.” What land description method did surveyors use for this piece of property?
- Lot and block
- Metes and bounds
- Monument and benchmark
- Rectangular government survey
- Rectangular government survey
Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.
A form of depreciation or loss in value caused by defects in design is called _______.
Functional obsolescence
Simone can’t believe that her client won’t let her put a lockbox on the property. How does he expect other agents to be able to show the home? Oh well, it’s not as if he’s asking her to do something illegal. The client’s wish is her command. What fiduciary duty is this an example of?
The duty of obedience
Which of these statements about frontage is true?
- A lot that’s 75 feet wide by 30 feet deep has a frontage of 30 feet.
- Frontage is used in calculating property taxes.
- The frontage for a lot that’s 120 feet by 85 feet is 120 feet.
- The frontage of a property on a corner is measured from the lot line on one side to the street’s center on the other.
- The frontage for a lot that’s 120 feet by 85 feet is 120 feet.
A buyer is purchasing a property for $500,000. His lender’s loan-to-value ratio is 90%. How much is the buyer financing?
$450,000
Which form of real property ownership (for owners other than married couples) means there’s equal ownership shares with undivided possession rights?
- Joint tenancy
- Tenancy by the entirety
- Tenancy in common
- Tenancy in severalty
- Joint tenancy
Joint tenancy provides equal ownership shares with undivided possession rights and requires four ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.
How many feet are in a mile?
5,280
A mile is 5,280 feet. When the British started using it as a length unit, it was necessary to relate it to furlong, a common length unit used in agriculture. One furlong is 660 feet. It was decided that one mile would be eight furlongs (8 x 660=5,280).
Which of the following is an example of easement termination by merger?
- The dominant estate owner takes action that shows a clear intent to stop using the easement.
- The owner of a servient estate buys the property of the dominant estate.
- The owner of the dominant estate has an alternate route and no longer needs the easement.
- The owners of both estates decide not to use the easement.
- The owner of a servient estate buys the property of the dominant estate.
In which form of co-ownership is a person’s ownership inheritable?
Tenancy in common
When the Sidells moved into their new home in Shady Acres, they were given a copy of a covenant document that listed restrictions on roofing, siding, fencing, and other visual components on their property. This type of covenant is likely enforced by what entity?
Homeowners’ association
Sylvan, the seller, and Eric, the buyer, have signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until Eric exercises his option to buy, only Sylvan is bound by the option agreement; he may not sell the property to anyone else during the option period. What type of contract is this?
Unilateral
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What’s the total amount the borrower will pay back over the life of the loan?
$367,687.80
Marsha’s title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?
- Karen has an unrecorded lease on the property.
- Marsha’s second mortgage on the property, which was properly recorded in January.
- Smith and Martin Building and Rehab files a mechanic’s lien on June 18.
- The local cable company’s easement through the property for underground wiring. Marsha disclosed this to the title company.
- Marsha’s second mortgage on the property, which was properly recorded in January.
Title insurance typically covers events or claims filed on the public record before the title insurance policy’s effective date but excludes disclosed and undisclosed easements.
Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis’ condo is worth much more two years later. Which economic characteristic does this demonstrate?
Area preference
Just remember the mantra “location, location, location!” A property’s value is largely dependent on where it is and the desirability of that location.
The economic principle known as ______ means that the value of property today is impacted by the current value of the total expected future benefits.
Anticipation
In which of these situations would the property most likely be conveyed with a trustee’s deed?
- Karla is the executor of her father’s estate and is selling his farm.
- Marvin and Tricia are selling their house.
- Tim’s property will be sold at auction in a foreclosure action.
- TLC Lending is selling an REO property.
- Tim’s property will be sold at auction in a foreclosure action.
In states that use a deed of trust as security for a mortgage, the trustee conveys foreclosed property with a trustee’s deed.
Using the income approach, determine the value of a property that has a net operating income of $15,000 and a cap rate of 15%.
$100,000
A landlord has an available unit but refuses to show it to several applicants. These applicants are all single women with children. The applicants who are shown the apartment are all individuals or couples without children. In what way is the landlord violating fair housing law?
He is discriminating against people based on familial status by refusing to show available housing.
Your client, Cassandra, asks you at what stage in her property ownership life cycle she’ll be impacted by income tax issues. You tell her that it’s likely that she’ll be affected at ______.
Acquisition, ownership, and reversion
Your buyer client, Max, just signed a purchase agreement for a $520,000 home. He has a 60% LTV ratio, and his lender’s charging a 1.5% loan origination fee. What loan origination fee can Max expect to pay at closing?
$4,680
Regina purchases a farm with 80 acres and owns her property in severalty. What does this mean for the company that purchased the mineral rights from the previous owner?
Regina didn’t purchase the mineral rights, which have been severed from the property by the previous owner.
Which statement most accurately describes the type of notice provided by recording a change of ownership document?
- Recording the deed provides actual notice of the property sale.
- Recording the deed provides constructive notice of the property sale.
- Recording the new owner’s title policy serves as constructive notice of the sale.
- Recording the promissory note provides constructive notice of the property sale.
- Recording the deed provides constructive notice of the property sale.
Which statement correctly identifies a federal fair housing law and what it addresses?
- The Civil Rights Act of 1866 made it illegal to discriminate on the basis of age and gender.
- The Fair Housing Act of 1968 attempted to eliminate discrimination based on gender.
- The Housing and Community Development Act of 1974 added marital status to the list of protected classes.
- Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.
- Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.
Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don’t have enough money saved to put down 20%. What type of loan seems most appropriate?
FHA
Your client, Eric, is interested in purchasing an industrial property to start a new business. You’ve recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn’t feel these tests are necessary. What should you do?
Keep records of your recommendations and a written response from Eric.
In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.
Decreases
If individuals want to use their property in a way that’s not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which one of the following groups?
The zoning board of appeals
Which term means the price a property is worth to its owner as currently enjoyed?
Value in use
A “homes for sale” magazine contains the following ad: “Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!” Which of these statements is true?
- The ad is in compliance with TILA because it doesn’t contain any of the trigger terms that require full disclosure of all financing terms.
- The ad is in compliance with TILA because the sales price is below the minimum that triggers full disclosure.
- The ad is not in compliance with TILA because financing terms must be provided on any residential real estate ad.
- The ad is not in compliance with TILA because it mentions financing without including all of the terms of the financing.
- The ad is in compliance with TILA because it doesn’t contain any of the trigger terms that require full disclosure of all financing terms.
Regulation Z requires all financing terms to be included in an ad only if certain trigger terms are present, but “low down payment and easy financing” are not triggers.
Which of these is an example of bulk zoning?
- Greenville developers must adhere to specific design parameters for construction within the city’s downtown area.
- Misty Falls restricts building any structure within 15 feet of a roadway.
- Oak City developers must include subdivision open space proportionate to the overall development acreage.
- Rushton city council members approved the location of a light industrial building within a currently-zoned agricultural area.
- Misty Falls restricts building any structure within 15 feet of a roadway.
Bulk zoning regulates density by mandating setbacks as well as limits on building heights and lot widths.
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority?
- Conditions of sale
- Location
- Market conditions
- Physical characteristics
- Conditions of sale
The elements appraisers consider in the sales comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.
A buyer with a $250,000 loan has a monthly principal and interest payment of $2,042.71. If $1,145.83 is interest, what is the new principal balance after the first payment is applied?
$249,103.12
Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?
It’s owned as an estate in severalty.
Corporations are legal entities and hold property similar to the way a sole proprietor or an individual does: in severalty.
Which of the following statements related to the power of taxation is true?
- If the property is foreclosed upon, property taxes are paid after all other creditors.
- Property tax liens take priority over any and all other liens on the property in most states.
- Property tax liens take the lowest priority after all other liens on the property.
- Taxation is an unstable source of income.
- Property tax liens take priority over any and all other liens on the property in most states.
If you have an 800-square-foot rectangular building and it sells for $75,000, that equates to ______ per square foot.
$93.75
Which economic principle says that a property’s value is determined by what it would cost to purchase a similar property?
Substitution
An abandoned or otherwise unused commercial or industrial site with suspected contaminants is known as what?
A brownfield
The gross income multiplier for an area is 12x. If the estimated annual rent is $10,000, what’s the property’s estimated value?
$120,000
After a life estate holder dies and ownership rights have either reverted to the original owner or have been transferred to a remainderman, with what type of estate is the property held?
Fee simple
At the end of a life estate, the reversionary owner or remainderman hold a fee simple estate.
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?
Prior appropriation
The doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely live in the western part of the U.S. where many states subscribe to this doctrine.
Which loan may require compliance with Appraiser Independence Requirements?
Conventional
What does an REO on a lender’s assets mean?
The lender owns real estate after a foreclosure sale.
A consumer has just sued TREC for its role as an administering authority of license law. What will the likely outcome be?
No civil lawsuit can prevail.
Co-ownership without inheritance rights is what kind of real property ownership?
Joint tenancy
Jamie enters an agreement to buy Yolanda’s home. Per the agreement, Jamie promises to provide a $5,000 earnest money deposit, whereas Yolanda promises to sell her home to Jamie. These promises represent forms of ________, which are required to make the contract valid.
Consideration
Which type of buyer tends to look for a home with less space, with a similar or better quality of living?
Trade-down buyer
Trade-down buyers are looking for properties smaller than their existing home, but want to maintain a similar or better quality of living than their existing home.
What’s your relationship with a buyer who’s not a client but is a customer?
You have no agency relationship with the buyer.
With local land use, the stress placed on the community’s infrastructure is an example of ______.
Development impacts
What is the type of possession in which a tenant stays after the right to possess has terminated?
Estate at sufferance
Jillian has a loan-to-value ratio of 90/10. This means ______.
Her loan is 90% of the value of the real estate used as collateral and she’s putting 10% down.
Rebecca has her broker’s license and has been appointed by the governor to serve as a member of the Tennessee Real Estate Commission. Which of the following criteria made her eligible to be a broker member of the commission?
- She has been a part-time broker consultant for 20 years.
- She has been engaged as a full-time real estate broker for the past nine years.
- She has been retired for two years after selling five successful brokerage firms she built from the ground up.
- She has taught pre-licensing courses at the University of Tennessee as her full-time occupation for 17 years.
- She has been engaged as a full-time real estate broker for the past nine years.
What’s the definition of a land contract?
Sellers provide funds or credit to buyers in order to close the transaction.
Under what circumstances may a seller legally terminate an exclusive right-to-sell listing agreement before its listing term has passed?
If the listing broker agrees in writing to the termination
The Federal Housing Administration helps prospective homeowners by ______.
Insuring lenders against borrower default
The FHA mortgage insurance program insures lenders against loss in the case of borrower default on qualified mortgages.
Which of the following elements of a deed signify the grantor’s intention to transfer title to the grantee?
- Act of conveyance
- Consideration
- Evidence
- Grantor/grantee
- Act of conveyance
Jamilynn violated antitrust law by engaging in price fixing. Which of these actions did she most likely perform?
- She agreed with licensees from other brokerages not to engage in business with licensees from a certain firm.
- She followed her brokerage’s pricing policy.
- She sets her commission based on the services she performs.
- She told a consumer the commission rate is standard for the industry.
- She told a consumer the commission rate is standard for the industry.
While two choices are possible antitrust violations, only the statement that there’s a standard commission rate in the industry is an example of price fixing.
What’s the maximum the Real Estate Education and Recovery fund will pay out on behalf of a single licensee, regardless of the number of awards or transactions involved?
$30,000
Which law requires the EPA to establish air quality standards?
The Clean Air Act of 1970
The Clean Air Act, created in 1970, requires the EPA to establish air quality standards for the protection of human health and the environment.
What does the rectangular government survey system use as the basis for legal descriptions?
Principal meridians, base lines, and sections
Sam the appraiser is most likely to use the cost approach for which of the following properties?
- Condominium built in the 1990s
- Cooperative
- Movie theater
- Single-family residence built in the 1950s
- Movie theater
The cost approach is not used in condo or coops and is not used as often with older properties, because there is difficulty in accurately estimating depreciation. Out of the options, the movie theater appraisal would most likely use the cost approach.
Which statement best describes a trade fixture?
- A fixture or item installed by a commercial tenant that becomes personal property of the landlord when the tenant moves out
- A fixture or item installed by a commercial tenant that’s considered personal property of the tenant
- Personal property of the tenant used as a bargaining chip when negotiating a sale
- Property of the landlord that’s used by the tenant and must remain on the premises when the tenant moves out
- A fixture or item installed by a commercial tenant that’s considered personal property of the tenant
Because a commercial tenant installs them for business purposes, trade fixtures are the tenant’s property, and may be removed when the tenant leaves, provided removal doesn’t damage the property, and is done before the lease expires.
Which clause is used in a security instrument to protect the original note holder if the security instrument is sold and the borrower subsequently defaults?
Non-recourse
The non-recourse clause makes the entity holding the note responsible for taking action if the borrower defaults.
Which of the following is a residential dwelling with attached walls, where the owner also typically owns the land on which the home sits?
- Apartment
- Condominium
- Single-family detached home
- Townhome
- Townhome
A townhome is a residence with attached walls where the owner also typically owns the land on which the home sits.
Which clause in a mortgage or deed of trust describes the borrower actions that constitute default and allow the lender to make the debt immediately due and payable?
Acceleration
This is the acceleration clause, which allows the lender to accelerate the loan.
Which entity guarantees loans?
U.S. Department of Veterans Affairs
The VA guarantees loans against default. VA loans are for veterans only and require no down payment.
Katrina’s business card has the REALTOR® logo on it because Katrina respects the National Association of REALTORS®, although she is not yet a member. This is _________.
A violation of real estate law
Licensees may not use designations they don’t possess or imply they’re members of organizations that they don’t belong to.
What’s the depreciation schedule for a residential income-producing property?
27.5 years
The depreciation schedule is 27.5 years for residential income-producing properties, and 39 years for non-residential income-producing properties.
Caveat emptor means ________.
Buyer beware
What’s the purpose of the Interstate Land Sales Full Disclosure Act?
To prevent the fraudulent sale of property across state lines
Theresa recently bought a time-share in Tennessee. If she finds that the terms of the agreement aren’t as originally advertised and that she’s been misled, how many years does she have from the time she purchased the time-share to file suit?
Four years
The Johnsons are shopping for a mortgage loan and are attracted to the below-market interest rate offered for the first year of an adjustable rate mortgage. They likely have a ______.
Teaser rate
Some ARMs offer a below-market interest rate or teaser rate during the initial period. The rate may increase sharply after the adjustment period.
Who can obtain a copy of a CLUE report for a given property?
The property owner
Property owners are entitled to a free CLUE report once per year.
Which statement best describes the method used to reconcile the value found for a property from the three appraisal approaches?
- The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.
- The appraiser will weigh the cost approach more heavily than the other two approaches.
- The appraiser will weigh the sales comparison approach more heavily than the other two approaches.
- The appraiser will weigh the value produced from each approach equally.
- The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.
How many approaches to value do appraisers generally use?
3
Your clients, the Jamesons, are selling their lakefront property. They receive an offer, and the buyer has included a pre-approval letter. The Jamesons balk, saying, “We want a pre-qualification letter, or we’re not selling.” What do you tell them?
“A pre-approval letter is better than a pre-qualification letter.”
Pre-qualification is based on buyer-provided information that’s not verified and doesn’t take the buyer’s complete financial picture into account. A pre-approval letter is verified and provides more assurance to the seller.
James is obtaining an 80/20 loan. What does 80/20 signify?
Amount financed/Down payment
An organization with many investors who jointly participate in a real estate investment and must adhere to the rules and regulations of the Securities and Exchange Commission is a ______.
Syndicate
A syndicate is an organization with many investors who jointly participate in a real estate investment and who must adhere to the rules and regulations of the Securities and Exchange Commission.
Which of the following is true about condominium ownership?
- A condo is a multi-family dwelling.
- A condo is a single-family dwelling.
- It involves proprietary leases.
- There is a large yard to maintain.
- A condo is a single-family dwelling.
Condos are single-family dwellings without yards to maintain. Cooperatives, not condominiums, involve proprietary leases.
If Elizabeth is a property manager, she is acting as what of type of agent?
General
A general agent is responsible for handling all of the details for a specific transaction. A special or specific agent has a limited scope of authority. Most real estate transactions are conducted in a special agency capacity. Property managers, however, often serve as general agents.
Which of the following best describes what an appraisal is?
- It’s a broker price opinion.
- It’s a comparative market analysis.
- It’s an assessment of market value.
- It’s an opinion of value.
- It’s an opinion of value.
An appraisal is one appraiser’s estimate of value for one specific property, created for one specific person (or party), for one specific purpose, and as of one specific date.
When comparing federal fair housing laws to the law in Tennessee, which of the following statements is true?
- Tennessee fair housing exempts real estate professionals from responsibility for discriminatory actions performed at a client’s request.
- Tennessee fair housing law doesn’t include exemptions for senior communities.
- The “Mrs. Murphy” exemption is more restrictive in Tennessee than in the federal Fair Housing Act.
- There are no differences between the federal and state fair housing laws.
- The “Mrs. Murphy” exemption is more restrictive in Tennessee than in the federal Fair Housing Act.
The “Mrs. Murphy” exemption in Tennessee is only available for owner-occupied one- to two-unit homes, while the federal law exempts an owner-occupied building with up to four units.
What’s the primary purpose of bulk zoning?
To reduce density
In most transactions involving a buyer or seller, real estate agents have limited authority to act on behalf of their clients. Therefore, which type of agency relationship are they in?
Special
In most transactions involving a buyer or seller, the real estate agent acts as a special or limited agent, whose primary role is to find or sell the house.
Which type of estate conveys possession, control and title (ownership)?
Freehold estate
Which document given before closing provides an estimate of the costs a buyer is likely to pay at settlement?
Loan Estimate
The Loan Estimate provides the buyer with the costs they are likely to pay at settlement and discloses the mortgage loan specifics, such as its key features, costs, and risks.
Jay’s new loan to purchase a property includes the seller’s existing mortgage. This type of loan is called a ______ loan.
Wraparound
Which term describes the process of real property becoming personal property by detaching it from the land?
Severance
Severance occurs when real property is detached it from the land. An example would be a tree that’s dug up, or a built-in hot tub that’s removed.
What method is most expedient when asking TREC to investigate a complaint?
A written request to the commission
For a deed to be valid, which two elements are required?
Signature of the grantor and consideration
The Lanham Act gives companies the right to ______.
Sue competitors that are using deceptive claims in ads
If the monthly property tax rate is $74.15 and the closing is on April 30, what will the seller owe at closing? Assume a statutory calendar and that the seller hasn’t made any payments. Round to the nearest cent.
$296.60
What’s the assessed value of a residential property in Tennessee that has an appraised value of $249,500?
$62,375
Homeowners can take several actions related to pest infestations, but ______ should be left to professionals.
Applying pesticides
In matters where the common law of agency conflicts with Tennessee agency law, how is the conflict resolved?
Tennessee agency law always takes precedence.
The earth’s surface, extending downward to the center of the earth and upward to infinity, including permanently-attached natural objects, is called ______.
Land
When an appraiser relies on comparable properties to estimate the adjusted market price of a property, the appraiser is using the _______ approach.
Sales comparison
Co-ownership with inheritance rights is what kind of real property ownership?
Tenancy in common
Tenancy in common is co-ownership with inheritance rights. Owners may sell their interest without the co-owners’ consent. Each has an undivided interest in the entire property.
Which agency enforces federal fair housing laws?
FHEO
The Office of Fair Housing and Equal Opportunity (FHEO) administers and enforces fair housing laws.
What’s a legal description?
A description of the land that specifies the boundaries and location of a specific piece of real property
Legal descriptions specify the boundaries and location of specific real properties, so they provide a less ambiguous and more complete description of properties than street addresses do.
Which term refers to a permitted deviation from current zoning restrictions that allows an owner to use land for a purpose that’s otherwise prohibited, and requires the owner to prove the zoning creates an unnecessary hardship?
Use variance
A use variance is allowed when the land is used for a purpose that, under the current zoning restrictions, is prohibited and causes the property owner unnecessary hardship.
Marvin purchased the right to use a resort unit for two weeks every year, although he doesn’t own the property itself. What kind of timeshare is this?
Right-to-use timeshare
Marvin has a right-to-use timeshare, which simply gives the purchaser the right to use a property for a specific time each year.
Ownership in a planned unit development consists of ______.
A parcel of land, the structures on it, and shared common areas
The purpose of the Truth in Lending Act (TILA) is to ______.
Require lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare those with the cost of using cash
You’ve signed a listing agreement with a client. Which of the following activities will you address next in order to complete the sales process for your listing?
- Deposit the earnest money check.
- Hold an open house.
- Prepare a features list.
- Publish the MLS listing with photos.
- Prepare a features list.
After signing a listing agreement, you’ll be preparing to list the property, which involves measuring rooms and preparing a features list.
Which of the following activities occurs before closing?
- The buyer and lender close on the mortgage loan commitment.
- The buyer obtains an insurance binder.
- The seller and buyer agents close on their cooperative brokerage agreement.
- The seller is paid the balance of the purchase price.
- The buyer obtains an insurance binder.
The buyer will need to obtain an insurance binder prior to closing, while the other activities listed here occur during closing.
Which type of appraisals may only be done by certified general appraisers?
Appraise all types of real property without regard for difficulty or transaction value.
What’s the term used in real estate to describe when personal property is attached to real property, thereby making it a fixture?
Annexation
Annexation occurs when personal property is attached to real property, which makes it a fixture.
According to the Tennessee Residential Property Disclosure Act, what is a seller of a commercial property in Tennessee required to provide the buyer?
Nothing, because commercial properties are exempt
The ______ isn’t used in states that were part of the original 13 colonies, or in Texas, West Virginia, and Kentucky.
Rectangular government survey system
In the sales comparison approach, the appropriateness of the various comparable sales in relationship to the subject is considered in a process known as ______, where certain factors may be given more weight.
Correlation
Through a correlation process, the most weight may be given to one or two of the sales that are presented, or equal weight may be given to all.
Which three pieces of legislation work together to prevent discriminatory lending practices?
The Equal Credit Opportunity Act, the Community Reinvestment Act, and the Home Mortgage Disclosure Act
You are the listing broker for Seller Tucker’s home in Raleigh. After two weeks without a nibble, you get a written offer on the property, and you promptly deliver it to Tucker. When you return to the office, you’re surprised to see that another offer has come in on Tucker’s house. You deliver that to Tucker immediately. He tells you not to bring him any more offers, because two is already too many. What should you do?
The MREC requires a seller’s agent to deliver as many written offers as the agent receives to the seller before the seller accepts an offer, there is an exception: If the seller gives you specific, written instructions not to bring any more offers, then you must follow these instructions.
The owner-manager relationship is based on the property manager performing particular duties. This would include ______.
Duties that are designed to maximize the owner’s net return
Property managers’ duties are those designed to maximize the owner’s net return. They must never take on duties outside their expertise or those that are illegal.
Violators of the Sherman Antitrust Act may be subject to fines. For what amount may corporations and individuals be liable?
Up to $100 million for corporations and $1 million for individuals
If Kathy wants to sell her property “as is,” which of the following statements is true?
- Kathy isn’t required to complete the Tennessee Residential Property Condition Disclaimer Statement.
- Kathy must complete both the Tennessee Residential Property Condition Disclaimer Statement and the Tennessee Residential Property Condition Disclosure forms.
- Kathy must complete the Tennessee Residential Property Condition Disclaimer Statement.
- Kathy must complete the Tennessee Residential Property Condition Disclosure form.
- Kathy must complete the Tennessee Residential Property Condition Disclaimer Statement.
Kathy must complete the disclaimer statement, and if she’s a non-exempt seller, she must obtain a waiver from the buyer of full disclosure.
Your client exchanged one property for a similar property and did not have to pay capital gains taxes that year. How did he do this?
He did a tax-deferred exchange.
This is an example of a 1031 tax-deferred exchange.
Jenny and her friend Kali went out to lunch. Afterward, they paid the bill. Their agreement to pay for the food they were served is what type of contract?
An implied contract
An implied agreement or contract exists based not on words, but on the actions or behaviors of the parties.
A broker’s price opinion is generally written by ______.
A real estate broker for a lender
BPOs are generally compiled by a real estate broker in order to give a lender an approximation of market price.
What are the two report types permitted by the Uniform Standards of Professional Appraisal Practice?
The restricted appraisal report and the appraisal report
Current USPAP standards permit only the restricted appraisal report and the appraisal report. Either may be reported in a form or narrative report format.
How can a licensee earn commission from a seller who has not listed the property through an agent?
Negotiate a commission using the Agreement to Show Property contract
Mark works at Farm and Country Bank, and has arranged an agricultural loan for Josh, a local organic farmer. Josh didn’t meet the bank’s normal underwriting standards, but Mark made the loan because he was able to arrange for a guarantee from ______.
The Farm Service Agency
The Farm Service Agency, which operates through the USDA, provides loan guarantees to lenders for up to 95% of the loss of principal and interest.
What’s a benchmark?
A permanent reference point for marking datums
How many members of the Tennessee Real Estate Commission must be licensed as real estate brokers and actively involved in real estate for a minimum of five years?
7
Which of the following terms best describes real property?
- Built-in
- Chattel
- Free-standing
- Movable
- Built-in
Built-in would describe real property that’s permanently affixed to the property. There are other types of real property—like plants in the ground—that go with the property. Another example is a remote control garage door opener—it stays.
Benji is a buyer’s agent, and he’ll receive a split of the commission paid from the sale of Harriet’s listing. The property sold for $425,000. The total commission paid from the sale is 6%, split evenly between the buyer and seller brokerages. Benji has an agreement with his broker that he earns 80% of the commission received. How much will Benji be paid from this sale?
$10,200
The exemption to the Fair Housing Act that would normally apply is moot when a real estate agent represents _______.
Owner-occupied buildings with fewer than four units
The exemption that normally applies to owners of one- to four-family dwellings is moot, because the law presumes agents are professionally trained and are aware that housing discrimination is against the law.
If an agency policy indicates that licensees will have traditional buyer or seller agency relationships with their clients, the agency relationship is with ________.
The broker and all affiliates
In Tennessee, standard or traditional agency obligates everyone in the brokerage to represent the client.
At what level or levels does antitrust oversight exist?
Federal and state
With a no down payment VA loan, the mortgage can’t be more than the amount of the ______.
Property’s CRV
On a VA loan, the funding fee ______.
- Can be paid by the seller, the buyer, or both
- Can be waived by the lender
- Can’t be financed
- Is charged to every borrower
- Can be paid by the seller, the buyer, or both
The seller, the buyer, or both can pay the funding fee. If the seller pays the funding fee, it isn’t counted as a seller concession.
What entity is responsible for enforcing the Equal Credit Opportunity Act?
The Consumer Financial Protection Bureau
The ECOA is enforced by the Consumer Financial Protection Bureau (CFPB). The CFPB regulates the ECOA through Regulation B, which specifies that applicants for credit be judged only on their creditworthiness (income, debts, credit history).
Which of the following responsibilities does the commercial property manager have that the residential property manager doesn’t have?
- Evict tenants who fail to comply with the terms and conditions of the lease agreement
- Negotiate leases
- Oversee the maintenance of buildings on the property
- Screen and select potential tenants
- Negotiate leases
Unlike residential property managers, commercial property managers also negotiate leases, either on behalf of tenants or on behalf of the building owners.
Chris used the VA guaranteed loan program to purchase a home five years ago. He now wants to sell that house and buy a new one. Is Chris allowed to use the VA loan program a second time?
Yes, but Chris will need to apply to have his entitlement restored once the original loan is paid off with the sale of the home.
Which IRS forms are independent contractors and employees required to complete?
Independent contractors fill out W-9s, and employees fill out W-4s.
Independent contractors complete form W-9, which is the Request for Taxpayer Identification Number. Employees complete form W-4, the Employee’s Withholding Allowance.
Curtis is having second thoughts about taking his partner to court over a written agreement they have concerning the purchase of a rental property. Curtis doesn’t think the contract will stand up in court because the partner is only 17 years old. What type of contract does Curtis have?
Unenforceable
Curtis entered into a contract with a partner who doesn’t have legal capacity due to his age. Because the contract doesn’t have all the essential elements of a valid contract, it’s voidable by the minor, and unenforceable in a court of law.
Buyer Josephine had just signed a contract on a house when she discovered that seller’s agent Franklin knew that this house was 3500 square feet, but he listed it at 3900 square feet. Which essential contract element has been compromised?
Consent
When someone commits fraud like Franklin has done, the act invalidates the buyer’s consent.
What professional behavior does Article 16 of the NAR Code of Ethics address?
Agency relationships
What is it called when a licensee provides general assistance for a customer but does not represent the customer as a client?
Transaction brokerage
According to the NAR Code of Ethics and Standards of Practice preamble, “REALTORS® should recognize that the interests of the nation and its citizens require the ____________.”
Highest and best use of the land and the widest distribution of land ownership
The preamble discusses the broader perspectives of how widespread property ownership is good for the country.
Which of the following forms is the listing agent responsible for having sellers complete and sign before uploading the property information to the Internet?
- Advertising waiver
- Lockbox authorization
- Property Information form
- Seller’s showing restrictions
- Property Information form
The Property Information form must be completed and signed by the seller before the listing agent creates the MLS entry, which then feeds internet real estate sites.
Blake is allowed to use his property in a way that’s prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?
Special use permit
This is a use variance. In contrast, an applicant for a special use permit doesn’t have to show hardship. He must simply show that the proposed use meets the conditions already contained in the ordinance (e.g., change in setback).
Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?
- If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed.
- If the disability is not obvious, the tenant must provide the landlord with full medical records to support the request.
- The landlord is not obligated to consider the request unless the tenant can produce either the original or a certified true copy of the animal’s service certification.
- The landlord must consider the request but may require an additional “pet” security deposit.
- If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed.
Housing providers may inquire as to the nature of the disability if it’s not apparent, and they must permit assistance animals for tenants with documented disabilities without charging an additional pet deposit.
Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt’s newly built homes is the ______.
Cost approach
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400’ deep. What was the price per front foot of the property?
$1,335.67
First, find the square footage (5.5 x 43,560’ = 239,580). You’re given one dimension of the rectangle, so find the other: 239,580 ÷ 400’ = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95’ = $1,335.67 per front foot.
A real estate transaction has a closing date of May 20. The seller, who’s responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement (round to the nearest dollar).
Credited $1,207
The seller is required to pay the for January 1 through May 19. The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days (the number of days the buyer is required to pay) = $1,206.84. That’s $1,207 if rounded to the nearest whole dollar.
Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?
CC&R
Conditions, covenants, and restrictions apply to an entire subdivision, while deed restrictions apply to a specifically named property.
An example of this type of leasehold estate is a month-to-month lease.
Periodic estate
Which approach to value is typically used for investment property of two- to four-family units?
Income approach
The income approach to value analyzes a property’s ability to earn future income and is typically used for single-family houses (where the primary use is as a rental property) and for two- to four-family units.
Which of these must Tennessee licensees disclose relative to specific real estate transactions handled by their brokerages?
- Any family relationships
- Expected commission
- Immediate family relationships
- Other affiliate broker involvement
- Immediate family relationships
Which form of real property ownership (for owners other than married couples) means there’s equal ownership shares with undivided possession rights?
Joint tenancy
Joint tenancy provides equal ownership shares with undivided possession rights and requires four ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.
Lenore makes a 95% offer on a townhouse that’s listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier’s check for $35,025 comprising the balance of her 20% down payment and closing costs. What’s the amount of her total down payment?
$54,150
Lenore’s offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).
Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $201,500. Their tax rate is 0.63%. How much will their monthly taxes be?
$105.79
Monthly taxes are calculated by multiplying the assessed value by the tax rate and dividing by 12: $201,500 × .63% = $1,269.45 ÷ 12 = $105.79.
John and Amy purchased a builder’s home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage?
10 years
Structural damage can take a while to appear, so homeowners will want to file a claim if it’s a decade or less.
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______.
In writing, and in accordance with uniform standards
FIRREA helps to regulate the ways that lenders value real property by requiring that appraisals be done by licensed, qualified personnel, and that the appraisal report be in writing.
Hope’s mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this?
Voluntary
A mortgage is a voluntary lien. With voluntary liens, people agree to have the lien placed against their real or personal property.
Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?
Correlation
Through a correlation process, the most weight may be given to one or two comparables, or equal weight may be given to all. The term reconciliation is often synonymous with correlation.
In Tennessee, what’s the maximum civil penalty that can be imposed for a single occurrence of a license law violation?
$1,000
In which of the following situations can the state use its power of escheat?
Nadine died with no heirs and no debt.
In a real estate transaction in which you represent the seller, your duty to other parties is to ______.
Treat them honestly and fairly
You must treat other parties in the transaction honestly and fairly, and you must disclose all material facts.
