WHAT I NEED TO KNOW Flashcards
What are the 3 general phases of real estate:
1) Land acquisition and development 2) Subdividing and development 3) Construction
The 3 general categories of residential construction are:
1) Speculative-purchasing one or more lots and constructing a home (or homes) without a buyer in advance of construction
2) Custom homes - A custom builder constructs homes under contract with a buyer, often using building plans provided by architects or buyers
3) Tract homes - a type of speculative building. A subdivision will pre-build several style model home types. They buyer select the floor plan from the models and a lot on which to build in the new subdivision
Deed restrictions refer to a
single parcel of land. Deed restrictions are placed by an owner who has created a restriction on future owners of the parcel of real estate
Restrictive Covenants impose limitation on the use of land in
an entire subdivision
Chapter 475 is divided into 4 parts:
1) pertains to real estate brokerage
2) pertains to real estate appraisers
3) Commercial Real Estate Sales Commission lien act, pertains only to commercial property
4) Commercial Real Estate Leasing Commission Lien Act, give a broker lien rights for earned commission associated with a brokerage agreement to lease commercial real estate
What does Fla Statute 455 define?
the general legal practice and procedure for the Dept of Business and Professional Regulation (DBPR)
What chapter of the Fla statutes define the procedural process by which regulatory agencies decide and implement agency action?
Florida Statute 120
Name the particular chapter pertaining to the administrative rules developed by the FREC, pursuant to the rulemaking process outlined in Chapter 120 Fla Statutes.
Chapter 61J2
Define a Florida resident
A person who resided in Florida continuously for a period of four calendar months or more within the preceding year - whether they lived in a recreational vehicle, hotel, rental unit or temporary or permanent location.
Define Moral Turpitude
Conduct contrary to honesty, good morals, justice, or accepted custom. Embezzlement and crims of larceny, including writing bad checks, are considered moral turpitude.
What is the broker experience requirement?
They must have held an active real estate license for at least 24 months during the the five-year period preceding application to become a Broker
Define Prima Facie
evidence that is good and sufficient on its face to establish a given fact or prove a case
Define Real Estate Services
Any real estate activity involving compensation for performing the service for another
What are the 8 services of Real Estate?
A Advertise real estate services B Buy A Appraise R Rent S Sell A Auction L Lease E Exchange
Who appoints the commission members of the FREC?
The Governor, subject to confirmation by the state Senate. Each member of the commission is accountable to the Governor, not the DBPR for proper performance
The FREC’s powers and duties fall into what three general areas?
Executive powers - to regulate and enforce the license law.
Quasi-legislative-the power to enact and revise administrative rules.
Quasi-judicial-the power to grant or deny license applications, to determine license law violations, and to administer penalties.
Who appoints the Director of the DRE?
The Secretary of the DBPR subject to approval by majority vote of the FREC.
What are the perks for military veterans?
Fee waiver of the initial application fee, biennial license fee, and unlicensed activity fee are waived for military veterans who apply for a real estate license within 24 months after honorable discharge.
involuntary inactive –
a) If a licensee fails to renew an active or voluntary inactive license (other than the first renewal).
b) suspended
c) revoked
When does a license become void?
a) after 24 months of inactive status
b) when it is cancelled
c) revocation
When a license becomes VOID it
NO LONGER EXISTS
Ineffective -
the license exists, but can not be used.
Examples of INEFFECTIVE are
a) voluntary inactive
b) fails to renew a license prior to expiration date (other than first renewal) and is involuntary inactive (that two year period before becoming void).
c) when an associate’s broker is suspended or revoked but they are not
d) Suspended. The license is “ineffective” during the period of suspension.
Are there any exceptions to permanent revocation?
YES, A license may reapply AFTER FIVE YEARS when they: A) filed for renewal but did not comply with the education requirement. B) Filed an application for a license that contained false or fraudulent information
Cease to be in force -
That period when a sales associate leaves one brokerage firm and is not yet registered under another or a school changes address and has not yet notified the state after 10 days.
Armed Forces exemption -
A license in good standing who is a member of the U.S. armed forces is exempt from the renewal provision during the licensee’s period of active duty and six months after discharge from active duty. If the military is out of state, the exemption also applies to a licenses spouse.
When was dual was revoked in the state of Florida?
1997
Duties of a no brokerage relationship
( DDA)
1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds
What are the duties of a Transaction brokerage relationship
(DDAUPEP)
1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds
4) Use skill, care and diligence
5) Present all offers and counteroffers
6) Exercise limited confidentiality
7) Perform additional duties that are mutually agreed to
What type of broker provides limited representation to a buyer, a seller, or both, but who DOES NOT represent either in a fiduciary capacity or as a single agent
A transaction broker
What type of broker is defined as a broker who represents, as a fiduciary, the buyer or seller but NOT both in the same transaction.:
A single agent.
What are the duties of a Single Agent Brokerage Relationship
(DDAUPCOLD)
1) Deal honestly and fairly
2) Disclose all known facts affect value of residential property
3) Account for all funds
4) Use skill, care and diligence
5) Present all offers and counteroffers
6) Confidentiality
7) Obedience.
8) Loyalty
9) Disclosure (Full)
What circumstances terminate a seller buyer relationship?
1) Fulfillment of the brokerage relationship
2) Mutual agreement to terminate the brokerage relationship
3) Expiration of the agreement
4) The broker renounces the single agent or transaction broker arrangement by giving notice to the principal (single agent) or customer (transaction
5) The customer or principal renounces the single agent or transaction broker arrangement by giving notice to the agent or broker. (they also maybe liable for damages)
6) Death of seller’s/buyers broker before they find a property.
7) Destruction of the property
8) Bankruptcy of the principal or customer
Which disclosure notice must be signed by the buyer and the seller in certain nonresidential transactions?
Request to use designated sales associate representation.
Which brokerage disclosure notice must be signed or initialed by the buyer or seller before implementation?
Transition to transaction broker disclosure. If the customer refuses to sign or initial the transition form, the licensee must stay as a Single Agent.
Must the NO BROKERAGE notice be disclosed in writing BEFORE showing the property?
Yes, However, the customer does not need to sign. If they refuse to sign or initial, the agent can put the form in the customer’s file with a note advising they refused to sign.
In a single agent agreement, a person who gives or delegates authority to another is referred to as the ___________ while the person who accepts the authority is referred to as the _________
PRINCIPAL; AGENT
authorized to perform all acts for a fiduciary (i.e. attorney handling trust agreement for disabled child)
UNIVERSAL AGENT
authorized to perform acts associated with the continued operations of a particular job or a certain business.
GENERAL AGENT
authorized to handle only a specific business transaction or perform a specific act
SPECIAL AGENT
What is required on a brokerage sign?
Name of brokerage company, broker name, and title “licensed real estate broker.”
What is a blind ad?
Fails to disclose the license name of the brokerage firm
Which laws prevent conspiring to fix commissions or fees?
The Sherman (Sherman-Clayton) Antitrust Law and Florida antitrust laws
What are the allowable Broker fund amounts for escrow accounts:
Property: $5000, Sales escrow: $1000, Combined: $5000
Advertising rental property info that is materially inaccurate is a
first-degree misdemeanor.
When must the broker notify the FREC of good faith doubt?
15 BUSINESS DAYS
Brokers must institute of the four settlement procedures (MALE) within how many business days of receiving conflicting demands or having a good-faith doubt.
30 BUSINESS DAYS
If a request to issue an escrow disbursement order is made to the FREC and the issue regarding the dispute was settled by the parties prior to the EDO being issued, the broker has how many days to notify the FREC?
10 BUSINESS DAYS
What are the 3 excepts related to the notice and settlement procedures for sales escrow agents?
1) If HUD sale, you have to follow their guidelines
2) If a condo, buyer can notify licensee of their intent to cancel within a period of time
3) Buyer can’t get financed.
For the recovery fund to pay,the agent must not have been an owner, buyer, landlord, or tenant in the transaction or an owner of a corporation who was an owner, buyer, landlord, or tenant in the transaction
TRUE
For the recovery fund to pay,the person who caused the wrong must have been a real estate agent at the time
TRUE
For the recovery fund to pay, the agent must have been acting solely in the capacity of a real estate licensee in the transaction.
TRUE
For the recovery fund to pay, a civil suit needed to be filed, a final judgment issued against licensee, and an attempt made to collect on the judgment
TRUE
Can punitive damages and interest be reimbursed from the recovery fund?
NO
Can a broker who complies with an EDO and is later sued may be reimbursed from the recovery fund without penalty?
YES
What is the time limit for a claim for the recovery fund?
A claim must be make within two years of either the alleged violation or discovery of the alleged violation. However, in no case may a claim for recovery be made more than 4 years after the date of the alleged violation
Violation of USPAP =
5 year suspension up to revocation
the breaking of a promise or obligation either by an act of commission or omission, default, nonperformance.
Breech
The Seven steps of a complaint of alleged violation:
1) Complaint filed
2) Investigation of the complaint
3) Probable cause determination
4) Formal complaint is issued if probable cause is found
5) Informal or formal hearing is conducted
6) Final order is issued
7) Judicial review (appeal) of the final order
When administrative complaint is mailed to licensee, the licensee also receives an
ELECTION OF RIGHTS
Purchaser of subdivided land of 25 or more lot has the right to cancel the purchase agreement within
SEVEN DAYS
What act prevents a lender from refinancing a loan to the same borrower within the first 18 months of making a loan, if doing so does NOT reasonable benefit the borrower.
FLORIDA FAIR LENDING ACT
Under RESPA what must be given to the applicant within 3 days of making an application.
SERVICING DISCLOSURE STATEMENT and GOOD FAITH ESTIMATE
What law prohibits mortgage lender from paying a real estate broker an earned referral fee
RESPA
Under the truth in lending act, give examples of triggering terms
amount or percentage of down payment, number of payments, term of repayment, amount of any payment, finance charge.
If any triggering terms are advertised, there must be a disclosure of the following:
Amount or percentage of down payment
Terms of repayment
APR and if this rate may be increased in the future
This act protects applicants from discrimination based on whether they receive income from public assistance programs.
EQUAL CREDIT OPPORTUNITY ACT
Land developers with subdivisions over 100 lots must register the subdivision with
HUD
What court case upheld Civil Rights Act of 1866
Jones vs. Mayer
The FAIR HOUSING ACT is found in
Title VIII of Civil Rights Act of 1968
Multi-Family Housing is defined as
Multi-Family Housing of five or more units OR Multi-Family Housing of four or fewer units IF THE OWNER DOES NOT RESIDE IN ANY OF THE UNITS.
What the cooling off period on condo sale between a owner is
3 BUSINESS days
What is the cooling off period on condo sale between a developer is
15 CALENDER days
What is the cooling off period on Timeshares sales
10 days
What are the four unities of a joint tenancy?
PITT
(1) possession, (2) interest, (3) title, and (4) time
Joint tenancy is different from Tenancy in common in what way?
A right of survivorship (when one co-owner dies, the deceased’s share goes to the surviving co-owner).
The only type of Concurrent ownership where there can be unequal ownership interest?
Tenancy in Common
In what type of type of Concurrent ownership does right of survivorship NOT exist
Tenancy in Common
What is an estate in severality?
It is created when title to property is in one person’s name (sole owner)
Describe the attributes of Tenancy in common.
Each owner has an undivided interest in the entire property. This interest can be left in a will or pass to heirs if there is no will
What are the 3 types of leasehold estates
Estate for years
Tenancy at will.
Tenancy at sufferance
What is an Estate for years?
A nonfreehold estate. A tenancy with a specific starting and ending date. ( a one year lease)
What is a Tenancy at Will?
A nonfreeehold estate. A tenancy with a lease agreement that has a beginning date but no fixed termination date.
What is a Tenancy at Sufferance?
A nonfreehold estate. It occurs when a tenant retains possession of the property beyond the ending date of a legal tenancy without the consent of the landlord (tenant holds over).
What is concurrent ownership?
Ownership by two or more persons at the same time
What is Equitable title
beneficial interest in real estate that implies that an individual will receive legal title at a future date.
In a will, REAL property is ________ and the recipient of the gift is a _________.
DEVISE; DEVISEE
In a will, PERSONAL property is ___________ and the recipient of the gift is a ____________.
BEQUEST; BENEFICIARY
What are the conditions of Adverse Possession?
HOT CAN
H - Hostile possession of Property
O - Open Possession with no attempt to conceal occupancy
T - Taxes were paid during all years the adverse possessor was on the property
C - Claim of title, even an imperfect one exists
A - Adverse possession must continue for 7 or more consecutive years
N - Notorious and flagrant public possession of property.
Define Eminent Domain
taking for just compensation. Taking through condemnation as long as for public use. It is a public restriction.
What are the 2 types of notice:
Actual and Constructive (legal notice)
Certain elements must be present in a deed. They are
C - Consideration (valuable or good)
E - Execution (signed by a competent grantor/2
witnesses.
D - Description of property
D - Delivery and acceptance
I - Interest or estate being conveyed (habendum
clause)
N - Names of a grantee and grantor
G - Granting and other appropriate clauses
Premises section of deed lists
the parties and date of the deed
Habendum clause is indicated by
“to have and to hold” If “forever” noted means fee simple. If “for the life of the grantee” is noted it is a life estate.
Granting clause contains
the necessary words to convey title
Covenant of Seisin
promise that the grantor owns the property and the right to convey title
Covenant against encumbrances
states property is free from liens or they are noted there.
Name the 4 types of statutory deeds
quitclaim, bargain and sale, general warranty, special warranty
Name the 3 special purposes deeds
Committee (mental), Guardian (children), Personal Representative (deceased)
Name he 3 most important subcategories of public/governmental limitations:
PET police action, eminent domain, taxes
Name the 4 most important subcategories of private limitations
DELL deed restrictions, easements, leases, liens
What is an Easement appurtenant?
lets an owner use of the neighbor’s property, such as the right to cross parcel A to reach parcel B.
What is an Easement appurtenant
lets an owner use of the neighbor’s property, such as the right to cross parcel A to reach parcel B.
What is an Easement in Gross?
benefits an individual or a business entity, not related to specific adjacent parcel. Your typical utility easement
What is an Easement in necessity?
used to remedy landlocked scenarios
What is an Easement by prescription?
created by longtime usage. They must be recognized after 20 years of open and continuous interrupted usage.
What is the agreement called when the holder of prior lien allows a junior lien holder’s interest to move ahead of the prior lien.
Subordination agreement
What promise is unique to a general warranty deed?
Further assurance.
substitution of a new party and/or new terms to an existing obligation (contract)
Novation
Mutual Assent is
The making and acceptance of an offer. a meeting of the minds in a contract. They must reach an agreement
the courts force a party in a contract to the terms of a contract.
Specific Performance
what must be paid if a buyer defaults in a contract
Liquidated damages
the amount of money equal to the extent of loss suffered
Compensatory damages
What is Statute of limitations for written contracts?
5 years
Statute of limitations for Parol ( oral) contracts ?
4 years
Which element is NOT required of a valid real estate contract?
Acknowledgement
Time period to give a seller a copy of the listing agreement
24 hours
Lead paint disclosure must be given to all tenants and buyers of homes built prior to
1978
Is an Automatic renewable clause is not allowed in real estate listing contracts?
NO
Vendor is the _______. Vendee is the __________
Seller; buyer
What is the famous court case requiring disclosure of material defects?
Johnson vs Davis
Name The law that requires that all real estate contracts be in writing and signed by both parties?
Statute of frauds.
An offer is terminated when any of the following happens?
WILDCARD Withdraw by offeror Insanity Lapse of time Death Counteroffer Acceptance Rejection Destruction of Property
Valuable consideration = _____ Good consideration = ______
money ; love
The 4 essential elements of a valid contract are
COLC Competent parties, offer and acceptance, Legal purpose, Consideration.
A contract is terminated when any of the following happens:
PMILBB Performance, Mutual rescission, Impossibility of performance, Lapse of time, Bankruptcy, breech.
An employment contract given to any number of brokers who work simultaneously to sell the owner’s property
Open listing
Employment contract given to one real estate broker, but the seller reserves the right to sell the property without paying a commission
Exclusive-agency agreement
the seller agrees to a specific amount, the broker retains the proceeds above this amount as commission. This can also apply to an exclusive-agency agreement.
net listing
On VA loans, borrowers are charged a
FUNDING FEE (or user’s fee) instead of a mortgage insurance premium.
VA Total monthly obligation ratio (TOR) =
41%
What are the HOUSING EXPENSE RATIO (HER) AND TOTAL OBLIGATION RATIO (TOR) for FHA loans?
HER = 31% TOR = 43%
In a mortgage, a mortgager is the
Homeowner and owns the home
In a mortgage, a mortgagee is the
is the lender and owns the mortgage
Open-end clause permits a borrower to
increase the loan amount as long as the total debt does not exceed the original total amount of loan.
What is the clause when the lender requires payment of mortgage in full if property is sold or transferred without the lenders consent.
DUE ON SALE CLAUSE
This clause allows the mortgagee, in the event of default, to require the entire balance be paid in full.
ACCELERATION CLAUSE
What is it called when title to the real property remains with the seller. The buyer receives equitable (legal) interest in the property
LAND CONTRACT (also called a contract for deed):
In this type of mortgage each year the monthly payments are increased and the additional amount goes toward the principal.
GROWING EQUITY MORTGAGE
What is the clause that allows another mortgage created at a later date to take priority.
SUBORDINATION CLAUSE
Prior to foreclosure, a home owner has the right to repay the amount owed plus interest and prevent foreclosure. This is called
EQUITABLE RIGHT OF REDEMPTION
the process of transferring a mortgage from one lender to another
ASSIGNMENT OF MORTGAGE
In TITLE THEORY the borrower retains
equitable title
The interest rate on an ARM is calculated by the adding the index rate to the
MARGIN
1 Discount point will increase the lender’s yield by _____ of a point. However, the initial cost to the buyer will be ____ the loan amount.
1/8; 1%
True or False: The discount rate IS NOT discount points
TRUE
What is the discount rate?
The Discount rate is the interest rate the Federal Reserve charges banks.
TRUE OR FALSE: State chartered commercial banks DO NOT need to display the word “national” somewhere in their name.
TRUE
The DEPOSIT INSURANCE FUND insures
federally chartered savings associations
Who regulates federal savings associations?
The OFFICE OF THRIFT SUPERVISION
FANNIE MAE (FEDERAL NATIONAL MORTGAGE ASSOCIATION) is a
secondary lender
the process of consolidating many small savings accounts belonging to individual depositors and investing the funds into larger, diversified projects
INTERMEDIATION
INTEREST is
the rent paid for the use of money
The mortgage market is tied to the law of
Supply and Demand
The Federal Reserve (Central Bank of the United States) was founded by
Congress
What are the calculations to determine the DOC STAMPS ON DEED:
70 cents for every $100 of FULL SALE PRICE. Remember to round up on stamp amount. eg: $79,950 ÷ $100 = 799.5 (round up to 800) 800 x .70 = $560. Note: last digit must be a 0)
The Fed uses three tools (or methods) or monetary policies. They are:
ORD
1) Open-market operations – the Fed’s purchase and sale of securities. A drop in funds causes interest rates to rise.
2) Reserve Requirements – the required amount banks must hold in reserve against deposit liabilities.
3) Discount Rate – the rate the Fed charge member banks for borrowing money.
DOC STAMPS ON DEED:
70 cents for every $100 of FULL SALE PRICE. Remember to round up on stamp amount. $79,950 ÷ $100 = 799.5 (round up to 800)
What are the calculations to determine the DOC STAMPS ON THE NOTE:
35 cents for every $100 on the face value of any NEW OR ASSUMED NOTE. Remember to round up on the stamp amount. eg: $64,950 ÷ $100 = 649.50 (round up to 650). 650 x .35 = $227.50. note last digit must be a 0 or 5)
What are the calculation to determine State Intangible tax:
(ONLY ON NEW MORTGAGES): .002 PER DOLLAR of debt. $100,000 x .002 = $200
Property taxes are paid in ________ arrears using the ____________ day method.
ARREARS; 365
Profit is
how much you make over and above your cost
TRUE OR FALSE It is customary when transferring title to have all pro-rated items determined as of the midnight before the date of closing. In some areas it can be the day of close.
TRUE
To convert into a decimal you:
divide the denominator into the numerator. (3/4) 3 ÷ 4 = .75
30 day method (statutory month method):
1) Determine yearly cost of item
2) Divide by 12 to find the cost per month
3) Divide by the monthly cost by 30 to determine the cost per day
4) Add the monthly rate by how many PREVIOUS months have passed (example: a closing on july 15th would have six previous months so you would add 6 x the monthly rate + the daily rate x 14 ( note: you don’t count day of close) to get your amount
The 30 day method is also called the
statutory month method
365 day method:
1) Divide 365 into the yearly cost of the item to obtain the daily rate
2) Multiply the number of days with the daily rate (don’t count day of close)
An exact duplicate of the structure is called
Reproduction cost
the amount of money required to replace a structure having the same use and functional utility as the subject property is called
Replacement cost
The four characteristics of value are
DUST
1) Demand
2) Utility (the ability to provide useful benefits)
3) Scarcity (supply and demand
4) Transferability
What is the formula to determine Present Value?
Net operating Income (NOI) ÷ Overall Capitalization Rate (OAR)
What is the formula to determine Net operating Income (NOI)?
Overall Capitalization Rate (OAR) X Present Value
What is the formula to determine Overall Capitalization Rate (OAR)?
Net operating Income (NOI) ÷ Present Value
Comp better =
subtract (CBS) (note: subtract from the comparable).
Comp inferior =
add (CIA) (note: add to the comparable)
The 3 methods of estimating building replacement costs are
1) Quantity survey method
2) Unit-in-place method
3) Comparative Square-foot or cubic-foot method ( also called the Comparative unit method or Unit Comparison method
Which method of estimating building replacement costs is a detailed inventory of all labor, materials, profit. The number of items is then multiplied by the cost per item.
Quantity survey method
Which method of estimating building replacement costs is where the cost of materials and labor is calculated for each component of structure. The base cost is then multiplied based on the total square feet.
Unit-in-place method
Which method of estimating building replacement costs is where the cost of reproducing a recently built property similar in size and function to the subject property. Square foot or cubic-foot costs are obtained for standard benchmark software.
Comparative Square-foot or cubic-foot method ( also called the Comparative unit method or Unit Comparison method)
maximum value of property is measured by determining cost to acquire an equivalent site to reproduce a structure as if new, and then subtracting accrued depreciation.
Cost Depreciation Approach
TRUE OR FALSE The Lump sum age method uses a properties EFFECTIVE age, NOT chronological age
TRUE
The total expenditure required to bring a new improvement into existence plus the cost of the land is also called
The cost
The amount of money (or its equivalent) for which a good is actually sold is called
The price
Income ÷ Interest Rate =
Value. (Example Pamike III $1600 monthly rent x 12 = $19200 ÷ 12% = 160,000).
Combining two or more adjoining properties into one tract
Assemblage
the ADDED value as a result of assembling two or more properties into one large parcel.
Plottage:
Gross Rent Modifer (GRM)
Sale price ÷ Gross monthly rent = GRM
The value of an income-producing property characterized by a significant operating history is also called the .
Going Concern
an adjustment on an appraisal in cases when a seller was under abnormal pressure to buy or sell or if there was a special relationship between the parties in the transaction is also called
Conditions of sale
an investor or buyer will pay no more for a property than the cost of acquiring, through purchase or construction, an equally desirable alternative property. This is also called
Principle of Substitution
the loss in value caused by things such as wear and tear, poor design, or the structure’s surroundings is called
Depreciation
the total depreciation that has accumulated over the years is also called
Accrued Depreciation
What is the Accrued Depreciation Formula?
Effective age ÷ Total economic life X Reproduction cost new. ( Example: 4 years ÷ 60 years X $225,000 = $15,000)
when a building component has been added or repaired and the owners are able to get their money back in added value
Curable Depreciation
when a building component has been added or repaired and the owners are NOT able to get their money back in added value
Incurable Depreciation
Depreciation can be attributed to 3 major causes:
Physical deterioration, Functional Obsolescence, External Obsolescence.
The total estimated number of years that the structure is expected to contribute to the property’s value is also called
Economic Life
the total annual income a property would produce if were fully rented and no collection losses were incurred
Potential Gross Income (PGI)
when vacancy and collection losses are deducted from the Potential Gross Income PGI and any income from other sources (parking, vending machines) are added in.
Effective Gross Income (EGI)
the income remaining after subtracting all relevant operating expenses from the EGI. Note: you deduct fixed and variable expenses and reserve for replacements but NOT mortgage or income tax payments.
Net Operating Income (NOI)
Gross Rent Modifier (GRM)
Sale price ÷ Gross monthly rent
Gross Income Modifier (GIM)
Sale price ÷ gross ANNUAL income
GRM uses _______________ to calculate its formula, whereas GIM uses ________________
GROSS MONTHLY RENT; GROSS ANNUAL INCOME
CMA’s contain information concerning 3 major categories of properties. They are:
those sold within the last 12 months, those on the market, properties that have expired within the last 12 months
the principle that the value of an superior property is adversely effected by its association with an inferior property of the same type.
Regression
people’s preferences, both physical and economic, for a certain area owing to factors such as weather, job, opportunities and transportation facilities
Situs
Duct systems include two sets of ducts. They are called
the supply and return
the studs extend continuously to the ceiling of the 2nd floor
Balloon frame construction
the wall framing is assembled on the concrete slab and then hoisted into place and anchored.
Platform construction
These type of windows can be opened up completely, providing maximum ventilation
Casement windows
a projection that extends out of the roof to provide additional light and ventilation
Dormer
Regarding Plumbing: The _______________ pressure plumbing system carries wastewater away from the home. The _______________ pressure portion carries water to the house
LOW; HIGH
They protect an electric circuit from damage caused by too much current
Circuit Breakers
They attach to the utility service cable and prevents water damage to wiring
Weather heads
a type of frame construction that allows for large spans between supporting side walls.
Post-and-Beam- Construction
Electricity travels in a closed loop referred to as a
Circuit
A type of window used solely for light and can not be opened
Fixed windows
This type of lot allow extra space in the backyard and are considered more quiet
Cull-de-Sac
These long skinny lots often bounded with five or six other lots
Key lots
The Black wire is normally the _____ wire. If there are two hot wires, the 2nd hot wire would be _____..
Hot; Red
This type of roof has one plane at a steep angle
Shed roof
Slab on grade construction, the pouring the slab directly on the ground with the footers is also called
Monolithic construction
The purpose of a U shaped flap (pipe) under a kitchen sink is to prevent
combustible gases from entering the home
Chapter 475 defines Business Opportunities as
any interest in business enterprises or business opportunities.
A type of risk that arises from the continual change in the business environment – it can not be transferred to an owner.
Dynamic Risk
When the benefits of borrowing exceed the costs of borrowing
Positive Leverage
When borrowed funds cost more than they are producing
Negative Leverage
One of the ways business brokerage is different from real estate brokerage – the assumption by the purchaser of ________ liabilities.
short-term
the entire resources of a business, including tangibles, intangibles, notes, cash, inventory, equipments, real estate, goodwill.
Assets
All income and expenses of a business for a stated period of time.
Balance Sheet
the difference between a company’s total current assets and total current liabilities.
Is called Working Capital
Which characteristic apply to BOTH Business Brokerage and Real Estate Brokerage.
Long-term liabilities
A concise summary of all income and expenses of a business for a stated period of time
The income statement
If given an amount and told it is a percentage of an unknown variable and then told to figure this unknown variable, it is done this way:
Divide the amount into the percentage. Example: you know that 3% is $900. To find out what the total amount was $900 ÷ .03 = $30,000
The total amount of money generated from an investment after the expenses are paid.
Cash Flow
What risk is associated with the ability of a property to pay operating expenses from funds provided from operations, borrowing, and equity sources
Financial Risk
______________ properties include service industries that support the needs of a local community, such as local repair shops, barbershops, banks etc.
Destination
What is the breakdown and amount for homestead ?
owners are entitled to a $25,000 exemption for city, county, and school board taxes. Owners with assessed values greater than $75,000 are entitled to an additional $25,000 tax exemption from city and county taxes only. Owners with assessed values between $50,001 and $75,000 receive a prorated amount of exemption in addition to the $25,000 base exemption.
A mill is one ____________________. There are 1,000 mills in ________. One mill can be written as _____.
one-thousandth of a dollar (or one-tenth of a cent’ one dollar; .001
Ad valorem means
according to value
Special assessments are a _______ tax levied on properties to help pay for some public improvement that benefits the property
one-time
.TRUE OR FALSE. Special assessments are ad valorem taxes—they are levied according to the value of a property
FALSE. They are the opposite. Special assessments are NOT ad valorem taxes—they are NOT levied according to the value of a property.
Usually, special assessments are levied on a ___________ for items such as sidewalks and street paving. They are often levied on a _____________for utility and sewer improvements.
front-foot basis; per hookup basis
The IRS useful asset life of nonresidential income-producing property is ____ years for calculating depreciation allowance. ______ years on residential income-producing property
39; 27.5
Veterans must be at least ___ percent disabled by military service-connected misfortune to be entitled to an additional $______ exemption on homesteaded property
10 PERCENT; $5000
It was designed to protect farmers from having taxes increased just because the land might be in the path of urban growth and therefore well suited for development.
Florida’s Green Belt Law
The IRS requires that buyers withhold ____percent of the gross sale price from foreign investors. The buyer must report the purchase and pay the IRS the amount withheld
10
For tax purposes, real estate commission is classified as ________ income
ACTIVE
Points are deductible in the _____, unless they are paid when refinancing a loan. In such cases, the points must be deducted _______________.
YEAR PAID; OVER THE ENTIRE LIFE OF THE MORTGAGE LOAN
The holder of a tax certificate can force a public auction of the property after _____ years (but no later than ______ years) by requesting a tax deed
TWO; SEVEN
Tax advantages of homeownership include:
A) a tax deduction of the interest paid on a home equity loan that does not exceed $100,000. B)exclusion of gain from the sale of a principal residence up to $250,000 for a single adult and $500,000 for a married couple. Note: THE EXCESS GAIN WILL BE TAXED AT THE CURRENT APPLICABLE CAPITAL GAINS C) up to $10,000 in penalty-free withdrawals from an IRA if used as a down payment on a personal residence for first-time home buyers.
The Value Adjustment Board is composed of
one school board member, two county commissioners, and two citizen members
Regarding Property Taxes: A) They become a lien on all real estate in Florida on _______ each year. B) Property taxes are due for the current year. _________.
Because of this, they are paid in _________
January 1; November 1 ; arrears
Exempt properties include property belonging to .
churches and nonprofit organizations
Immune properties are
city, county, state, and federal government buildings
TRUE OR FALSE You CAN NOT deduct the loss from the sale of a principal residence.
TRUE
Market indicators include
price levels, vacancy rates, and sales volume
TRUE OR FALSE The real estate market is unusually slow to respond to changes in supply and demand
TRUE
As defined by the Census Bureau A household, as defined by the Bureau of the Census, U.S. Department of Commerce, is .
ANY PERSON OR GROUPS OF PERSONS occupying a separate housing space
TRUE OR FALSE As occupancy rates increase, rental rates tend to increase
TRUE
TRUE OR FALSE Heterogeneity is a term that DOES NOT refers to the uniqueness of land
FALSE. Heterogeneity is a term that DOES refer to the uniqueness of land
The variables that influence SUPPLY are
(SCLM)
1) availability of skilled labor
2) availability of construction loans and financing
3) availability of land
4) availability of materials
The variables that influence DEMAND are
(PPIMT)
1) Price of real estate
2) Population numbers and household composition
3) Income of consumers
4) mortgage credit (availability)
5) tastes or preferences of consumers.
The barometer of the real estate market is considered to be the
cost and availability of credit
The MOST important cause of population increase in Florida has been
the IN-MIGRATION OF NEW RESIDENTS
TRUE OR FALSE The company who does the producing is the most efficient producer of a comparable quality product
TRUE
Building codes protect the public health and safety from
inferior construction practices
TRUE OR FALSE Zoning ordinances authorize segmentation (dividing) of a community into districts or zones in keeping with the character of the land and structures and with their suitability for particular uses and uniformity of use within each zone
TRUE
The purpose of commercial zoning is to regulate _________ . The purpose of residential zoning is to regulate _________.
INTENSITY; DENSITY
Intensity is determined by the type and amount of
pedestrian and vehicular traffic generated by a commercial enterprise
Density is
the number of buildings per acre
A strip of land separating a higher density land use from a lower density use is called
A buffer zone
There are three areas of responsibility for which city planning commissions are commonly delegated final authority. They are
(1) subdivision plat approval, (2) site plan approval, and (3) sign control.
Allows a property owner to vary from strict compliance with all or part of a zoning code. It is permission to build or use to relieve a hardship not caused by the owner
A Variance
Florida’s Growth Management Act of 1985 requires that the infrastructure be in place before new development is allowed. This is called the
CONCURRENCY PROVISION.
TRUE OR FALSE Developers of large new building projects that affect more than one county must prepare an environmental impact statement
TRUE
Zoning ordinances control
UTILIZATION
Building codes control ________ . Health ordinances control _____________________ .
construction and materials; maintenance and sanitation
Permission to build or use in apparent conflict with existing zoning ordinance is called
Special exception
Permission to continue to use in spite of enacted zoning ordinance is called
Nonconforming use
Thoroughfare studies are normally a
COOPERATIVE PROJECT
The MOST basic of all the background planning studies is the
POPULATION STUDY
Physiographic studies study the
soil drainage percolation load bearing capacity
Economic base studies study the
effect of base industries employment in the area.
Base industries attract outside money to an area.
What is a thoroughfare study?
Traffic circulation
what is a special use land use classification?
public schools, churches, parks
The legal right to enact zoning laws is derived from
POLICE POWERS
In municipalities with planning commissions, the final authority in planning matters is the
ELECTED CITY GOVERNMENT OFFICIALS – not the planning commissions.
_______________ used to describe the positioning of a structure on a lot so that one side rests directly on the lot’s boundary line (no setback requirement).
Zero lot line
______________________________is a self-contained development planned under special zoning ordinances that allow maximum use of open space by reducing lot sizes and street sizes.
A planned unit development (PUD)
__________________________handles appeals and requests from property owners for zoning changes.
The Zoning Board of Adjustment
The act of failing to pay money to a person entitled to receive it
Failure to account for and deliver
An outline of the charges against a licensee that must be answered within the statutory time limit; also referred to as an administrative complaint.
Formal Complaint
The official placement of a real estate business or individual into the records of the DBPR
Registration
The withholding of information
Concealment
A plea of no contest entered in a criminal court of law. The defendant does not admit or deny the charges.
Nolo contendere
A legally binding contract that the law will recognize
Enforceable contract
Sufficient to be legally binding; enforceable
Valid
An agreement that obligates both parties to perform in accordance with the terms of the contract
Bilateral contract
A transfer of rights and duties under a contract
Assignment
The chain of events that results in a sale
Procuring cause
An agreement that obligates only one party to perform
Unilateral contract
How is the HOUSING EXPENSE RATIO (HER) calculated?
Monthly Housing expese (PITI) ÷ Monthly Gross Income = HER
How do you calculate the TOTAL OBLIGATION RATIO (TOR)?
Monthly housing expenses (PITI, credit cards, loan payments, child support payments,etc) ÷ Monthly Gross Income. = TOR
What is the FUNDING FEE for a VA loan?
2.15% of the loan amount with no down payment for first=time users. They may also be added to the loan amount and financed over the life of the loan
Can the FUNDING FEE be waived on a VA loan?
Yes. If the veteran has a service-connected disability.
Does the VA set loan limits?
No, however, the loan may not exceed the Certificate of Reasonable Value (CRV). The CRV is based on the property value estimated by a VA approved appraiser.
Do VA loans have due on sale clauses?
No. They are assumable - even to non-veterans.
VA loans prior to this date are non-qualifying assumable; after this date, they are not.
March 1, 1988
On VA loan assumptions after March 1 1988, the buyer must pay a ______________ fee to the lender plus an _________________ fee to the VA. After this, the seller is relieved from liability
Assumption or transfer fee; Assumption
The Total Obligation Ratio (TOR) for a conventional loan is
36%
This clause permits the lender to increase the interest rate
Escalator clause
What is the date that the tax exemption filing period ends for homestead
March 1
When do the for the PREVIOUS year become delinquent?
April 1
A provision in a mortgage allowing the borrower to surrender the property to the lender without personal liability for the loan
Exculpatory Clause
What is the formula to determine profit?
Profit Made
______ = _______
Cost Paid
Eg: Purchase of $140k Sold for $180 40 ÷ 140 = 28%
What is alienation?
The act of transferring property. It can be voluntary (in a will) or involuntary (foreclosure/eminent domain).
The General Warranty deed contains three unique covenants. They are:
Further assurance, quiet enjoyment, warranty forever.
Five types of leases
Gross (fixed amount), net (fixed amount plus building expenses), percentage (based on gross sales), variable (tied to an index), ground (land only, tenant will construct own building).
Disintermediation is when
normal people borrow money from sources other than financial institutions
A Florida Real Estate License expires in
4 years
A flat roof is also called a
Built up roof
The ratio between a property’s gross income and its selling price is
The Gross Rent Modifier.
The maximum time a real estate license can be suspended is
10 years
The tax reform act of 1997 created
the $250k/500k exclusion on sale of primary residences.
The money from the recovery fund comes from
it is collected from licensee’s
The recipient of a power of attorney is called a
attorney in fact
In a Limited Partnership, are the limited partners required to register with the DPBR?
NO
The three approaches to estimating value are
1) sales comparison approach 2) cost-depreciation approach 3) income approach
The intent to misrepresent material fact or to deceive in order to gain an unfair advantage or harm another person
Fraud
An outline of allegations of facts and charges against the licensee
Administrative omplaint
A disciplinary hearing heard by an administrative law judge if the licensee-respondent either requests a formal hearing or if the licensee disputes the allegations
Formal hearing
A disciplinary hearing that is an expedited way of resolving a disciplinary case provided that the licensee does not dispute the alleged facts stated in the complaint
Informal hearing
An administrative law judge’s findings, conclusions, and recommended penalty
Recommended order
A piece of information that is relevant to a person making a decision and that affects the value of the real property
Material fact
Reasonable grounds (sufficient facts and evidence) to warrant prosecution
Probable cause
The entity that employs administrative law judges to conduct formal hearings of administrative complaints against licensees
Division of Administrative Hearings (DOAH)
Issued by the DBPR for a first-time, minor rule violation that does not endanger the public health, safety, and welfare.
Notice of noncompliance.
An alleged violation of a law or rule
Complaint
What is an Estate in Reversion?
When the property returns to the grantor in a Life Estate.
What is a Remainder Estate?
When the property goes to a third party in a Life Estate
Who is a Vested Remainderman?
someone whose legal name is Specified in a Life Estate
Who is a Contingent Remainderman?
someone whose legal name is NOT specified (such as a first-born child).
Does the DBPR investigator have the authority to immediately issue a citation?
YES
Which type of alienation is voluntary? A) Descent B) Eminent domain C) Deed D) Escheat
C) Deed
A roof design that incorporates an overhang on all sides is called a
Hip Roof
Gable roofs are cost effective because they use a
Single Truss Design
A type of roof characterized by what appears to be a gable roof that then steeps sharply on one side
Saltbox
Another name for a barn style roof
Gambrel
A French Style Roof
Mansard
The lender’s estimated overhead plus profit is what part of the calculated interest rate of an adjustable-rate mortgage?
Spread
With respect to the Fair Housing Act, are age, occupation, marital status or sexual orientation protected
NO
An agreement between two states that allows a real estate licensee who holds a valid real estate license in one of the states to practice real estate in both states is known as
Reciprocity
Does Florida have Reciprocity with any another state?
NO. They would need to utilize mutual recognition and take a take a 40 question state test (they don’t need the prr-licensing education requirement)
What type of value is associated with a rapid sale?
Liquidation value
_________ value is the estimated amount for which improvements can be sold at the end of a structure’s useful life
Salvage
What is the primary difference between Lien Theory and Title Theory?
Lien Theory = Borrower retains title, Lender is protected with a lien
Title Theory = Property is conveyed to the Lender through a mortgage deed and the Borrower retains Equitable Title.
What type of lumber is processed with chemicals to make the wood resistant to rot and termites?
Pressure-treated
How many days notice is required to terminate a week-to-week tenancy at will?
Seven
True or False: Regarding the Homeowner’s Association Disclosure Summary, the contract for sale must state that if the disclosure summary is not provided to the buyer before executing the contract, the contract is voidable.
TRUE
True or False: Regarding the Homeowner’s Association Disclosure Summary, the contract for sale must state that to void the contract, the buyer must give the seller or the seller’s agent written notice of the buyer’s intention to cancel the contract within 3 calendar days after receipt of the disclosure summary or prior to closing, whichever occurs first.
TRUE
What is the minimum cash investment on an FHA loan?
3.5%
A friendly foreclosure (nonjudicial procedure) in which the mortgagor gives title to the mortgagee.
Deed in lieu of foreclosure
Allows a receiver to be appointed to collect income from the property to ensure that it is used to make mortgage payment in the event of default
Receivership clause
A written statement signed by the borrower verifying the amount of the unpaid balance, the rate of interest, and the date to which the interest has been paid prior to assignment; also, often requested by a closing agent to verify the payoff amount for the seller prior to conveying a property
Estoppel certificate.
any new mortgage accepted by the seller as part of the purchase price.
Purchase-money mortgage
Allows the mortgagor to redeem a foreclosed property for a specified period after the foreclosure sale. Note: it is not available in Florida
Statutory Redemption Period
Demand deposit are also called
Checking accounts
A listing given to one broker who is assured of a commission who sells the property
Exclusive Right of sale listing
An employment contract with a purchaser
Buyer Brokerage Agreement
