Test Questions (old) Flashcards
A buyer purchased an $800,000 house with an 80% loan to value ratio. The lender charged 3 discount points to the buyer. Including the down payment, how much must the buyer pay at closing?
$179,200
At 20%, the buyer’s down payment was $160,000. Since each point is 1% of the $640,000 loan value ($800,000-$160,000), 3 points would be 3 x $6,400 or $19,200. Therefore the buyer’s total cash-to-close costs are $179,200.
Jones, a married man with children, died without leaving a will. His real estate holdings are valued at over one million dollars. Jones’ real estate would:
A) be held in trust pending appearance of heirs.
B) be distributed according to the laws of descent and distribution.
C) revert to the state government.
D) revert to the Federal government.
B) be distributed according to the laws of descent and distribution.
Each state has provisions for distributing assets based on a priority of relationships–typically, spouse first, then children, then other relatives.
A lien placed against a specific property by workers or suppliers who have not been paid for labor or materials used in construction or improvements to the property is known as:
a mechanic’s lien
A mechanic’s lien, as the name states, is placed by mechanics, other workers, or suppliers of materials.
Don’t confuse this with voluntary liens, created by choice, equitable liens, created by agreement, or statutory liens, created by law.
The rights of a landowner to use the water located on an adjacent lake or ocean are known as:
A) riparian rights
B) zoning rights
C)littoral rights
D) livery of seisin
C) Littoral rights
Again, while both riparian and littoral rights concern water, littoral rights specifically apply to nonmoving bodies of water, like lakes and oceans. Zoning and seisin both deal with land control.
Which of the following duties is NOT applicable to both residential apartment managers and condominium managers?
A Groundskeeping and maintenance B Purchasing supplies C Holding operating expenses down D Occupancy levels
D) occupancy levels
Condominiums are generally owner-occupied and so vacancy rates are not relevant. Additionally, the owner of an apartment building would not want to hold a property manager responsible for occupancy rates since that provides an incentive to rent to people whose credit or references indicate they may pose more problems than filling a vacant unit would be worth.
A lien placed against a specific property by workers or suppliers who have not been paid for labor or materials used in construction or improvements to the property is known as:
A a statutory lien B a voluntary lien C an equitable lien D a mechanic's lien
D) Mechanics lien
A mechanic’s lien, as the name states, is placed by mechanics, other workers, or suppliers of materials. Don’t confuse this with voluntary liens, created by choice, equitable liens, created by agreement, or statutory liens, created by law.
A listing broker had a signed sales contract on a house. The broker then noticed a crumbling wall in the basement. Who should the broker inform about the wall?
A Buyer only B Seller only C Both buyer and seller D Buyer, seller, and mortgage company
C both buyer and seller
Licensees owe honesty and disclosure of all material facts to both buyer and seller. Material facts do not need to be disclosed to mortgage companies. That’s because their primary interest in the property is value and any material defects will already have been factored into the price well before closing.
The originally scheduled number of years for a loan is also called the:
A lien B encumbrance C term D period
C Term
A term is the original time period of the loan. Liens and encumbrances have to do with the property itself.
Nelson (grantor) sells his home to Randall (grantee)”subject to” an existing first mortgage loan he obtained five years ago. After nine months, Randall can no longer continue to make the monthly payments. Under these circumstances:
A
the purchaser (grantee)has no liability to the lender.
B
the purchaser is solely liable to the lender.
C
the purchaser is primarily liable to the lender and the seller is secondarily liable.
D
the seller is primarily liable and the purchaser is secondarily liable.
A) The purchaser (grantee) has no liability to the lender
A grantee taking title to a real property “subject to” a mortgage is not personally liable to the mortgagee for payment of the mortgage note. In the event that the grantor/mortgagor defaults in paying the note, however, the grantee could lose the property, and thus his or her equity, in a foreclosure sale.
What rights apply specifically to non moving bodies of water?
Littoral rights
-both riparian and littoral rights concern water, but littoral rights applies to non moving bodies of water like lakes or oceans
A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?
A There is no consideration involved. B No acceptance has been given. C No earnest money has been enclosed. D There is no current listing agreement.
B) No acceptance has been given
It has not been presented to or accepted by the owner. Remember, contracts aren’t valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it’s accepted and the transaction closes, the broker will generally be entitled to his or her full commission.
The essential elements of a contract include all of the following EXCEPT
A offer and acceptance. B notarized signatures. C competent parties. D consideration.
B) notarized signatures
A contract sets forth the terms and conditions of a real estate transaction, but does not itself transfer ownership. Thus it does not need to be notarized.
The title to real estate passes when a valid deed is
A signed and recorded. B delivered and accepted. C filed and uploaded to the cloud. D executed and mailed.
B Delivered and accepted
Valid when deed is delivered and accepted
Fundamentally, real estate transactions only involve two parties–the buyer and the seller. All that’s necessary to create a legal sale is for one party to make an offer the other accepts. Recording, escrow, real estate licensees, mortgage companies and the like facilitate and support the transaction process but are not requirements of a legal sale.
A deed restriction would apply to the:
A » current owner only
B » present and future owners
C » original developer
D » homes association
B Present and future owners
(B) A deed restriction is recorded on the public record and is binding on all current and future owners. (A) The restriction would not be for the present owner only. (C) The original developer normally establishes the deed restrictions. (D) The homes association normally can bring an action asking for enforcement of the deed restrictions.
What is the purpose of a private deed restriction?
A » To control the use of a property for a maximum of 25 years
B » To control the zoning of the property in the future
C » To control ownership of property in the future
D » To control permitted uses of the property
D) control permitted uses of the property
(D) Private deed restrictions, such as type of fences, roofs, etc., do control permitted uses of the property. (A) Deed restrictions are binding on future owners period, not just for 25 years. (B) Zoning laws are passed by the government, whereas deed restrictions are placed by private parties. (C) Deed restrictions are NOT to control ownership, rather to control permitted uses.
