what you got wrong Flashcards
1
Q
A special-purpose deed used when title is transferred with little or no consideration is a:
A
Deed of gift
2
Q
Which of the following BEST describes the difference between lien theory states and title theory states?
Lien theory states use deeds of trust, and title theory states use mortgages.
Lien theory states use mortgages, and title theory states use deeds of trust.
Lien theory states use promissory notes, and title theory states use deeds of trust.
Lien theory states use mortgages, and title theory states use promissory notes.
A
While both lien theory states and title theory states use promissory notes (the promise to pay), lien theory states use mortgages and title theory states use deeds of trust.
3
Q
What is the doctrine of laches?
A
The doctrine of laches is a doctrine used by the courts to stop a legal claim or prevent the assertion of a right because of undue delay, negligence, or failure to assert the claim or right.
4
Q
What is the difference between commingling and conversion?
A
Commingling = putting personal funds into a trust funds account
Conversion = using trust fund money (aka money that does not belong to you) to buy things for yourself
5
Q
What word is allowed to be used in a CMA/BPO in North Carolina?
Worth
Appraisal
Estimate
Value
A
Estimate
6
Q
When was lead based paint banned?
A
1978
7
Q
Sander bought an investment property for $200,000. He financed $160,000. At the time of purchase, he owned $40,000 outright. Five years later, he has paid down $20,000 worth of debt, and the home has increased in value to $250,000. He now owns $110,000 of the property outright. What concept does this illustrate?
A
Equity buildup is an increase in equity over time, often due to a property’s appreciation or paying down mortgage debt. As Sander’s property value increased and he paid off his loan, his equity in the property increased.
8
Q
When measuring for square footage from the inside of the house, how many inches would you add? Why do you add these inches?
A
6
Because the exterior wall is thicker than the interior wall.
9
Q
Which of the following would be considered a private land-use control?
building code
protective covenant
zoning ordinance
subdivision regulation
A
protective covenant
10
Q
What is an independent contractor real estate agent?
A
A sole proprietor
11
Q
What is price fixing, collusion, and boycotting?
A
- Price Fixing: When competitors collude to set or control prices, rather than letting market forces determine them. It’s illegal as it reduces competition and harms consumers by artificially inflating prices.
- Boycotting: When competitors agree not to do business with certain parties, restricting their access to markets. It can be illegal if it hinders competition.
- Collusion: Illicit cooperation between competitors, often done in secret, to gain mutual benefits at the expense of consumers or other market participants. It includes practices like price fixing and boycotting, and it’s generally illegal.
12
Q
Radon gas can enter a home through:
A
cracks in the foundation
13
Q
The soft, perforated underside of an eave is called what?
A
soffit
14
Q
What does HVAC stand for?
A
Heating, ventilation, and air conditioning systems
15
Q
Which of the following is true regarding the Residential Property Owners Association Disclosure Statement (RPOADS)?
The RPOADS and the Mineral Oil and Gas Rights Disclosure should be given prior to the buyer’s first offer to purchase to avoid a three day right of rescission.
Sellers may be subject to misrepresentations if they check no representation when they know that a system is not functioning properly.
Agents are required to answer all questions as either “yes” or “no” and are not allowed to check “no representation” when selling their own homes.
Agents may complete the RPOADS for the clients if the client has limited technical knowledge on the systems of the house.
A
The RPOADS and the Mineral Oil and Gas Rights Disclosure should be given prior to the buyer’s first offer to purchase to avoid a three day right of rescission.
16
Q
An agent is working in an open house that is listed by another agent in her firm. Because of the attractiveness of the property, the agent experiences significant traffic and several unrepresented buyers. Which of the following is most accurate regarding this scenario?
Buyers could freely enter the house and discuss certain features of the house and leave without having reviewed the WWREA disclosure with the agent.
The agent should present the Working With Real Estate Agents disclosure to all persons who walk through the door.
The agent could share the seller’s confidential information with an interested buyer since it is not her listing.
Unrepresented buyers must be referred to an agent with another firm to avoid the improper practice of agency.
A
The correct answer is that buyers could freely enter the house and discuss certain features of the house and leave without having reviewed the WWREA disclosure with the agent. No agency discussions or disclosures would be necessary if first substantial contact was never reached.
17
Q
What two elements must be present in order for a contract to be considered executor?
A
An executor contract is a valid contract that is still ongoing, so an executor contract requires that there be a binding contract on multiple parties (so that would require ALL of the essential elements of a contract), PLUS one or more parties has yet to perform their contractual duties.
18
Q
What does “debit” and “credit” mean in the context of a settlement statement/closing disclosure
A
Debit = take
Credit = give
19
Q
A buyer is purchasing a house that currently has a tenant. The tenant pays the rent in advance on the first of the month. A closing takes palace on August 20th, how would the rent proration appear on the settlement statement or closing disclosure?
A
The answer is debit seller, credit buyer in equal amounts. Think of it this way. The seller has the rent in his pocket for the whole month because the tenant paid in advance on the first of the month. The buyer deserves the rent for the days of the month that he owns. Therefore, the last 11 days of the month (August 21 – 31) should be taken (debited) from the seller’s proceeds and the exact same amount should be given (credited) to the buyer.
20
Q
What type of maintenance involves periodic, routine inspections to catch minor issues before they worsen, and to keep equipment and property in good working order?
A
Preventative maintenance
21
Q
What is routine maintenance vs preventative maintenance?
A
Routine maintenance is monitoring, assessing, and attending to the needs of a facility’s most necessary features. Preventative maintenance involves periodic, routine inspections to catch minor issues before they worsen, and to keep equipment and property in good working order.
22
Q
Why is urea-formaldehyde foam insulation (UFFI) dangerous?
A
Because when it hardens, it releases dangerous gases. But DO NOT confuse this danger with radon gas danger, which comes from underground and enters the home through cracks in the foundation, not from UFFI!
23
Q
A buyer’s agent assists the buyer in making an offer on a unique property. Because of the property’s unusual characteristics, the most commonly used offer to purchase (NCAR form 2-T) does not address many of the issues of the contemplated purchase. What strategy would the buyer’s agent suggest to best serve the client in making an offer?
A
Addendums
24
Q
What is the doctrine of caveat emptor?
A
The doctrine of caveat emptor is a legal principle that means “let the buyer beware.” It places the responsibility on the buyer to be cautious, thorough, and diligent when purchasing goods or property. In other words, it implies that the seller is not obligated to disclose defects or issues with the item being sold, and the buyer should conduct their own investigations and assessments before making a purchase. However, it does not allow the seller to misrepresent or mislead the buyer.
25
Which listing agreement is characterized by providing an agent the sole right to list the property but allows for the seller to sell the property himself and avoid paying compensation?
Exclusive Agency
26
Commission Rule 58A.0104(o) specifically prohibits agents from
acting as dual agents on their own homes.
27
What is the difference between an "exclusive right to sell " agreement and an "exclusive agency" agreement?
Exclusive Right to Sell Agreement: "Hi, I'm the exclusive right to sell agreement. I'm the go-to choice for sellers who want a single agent to exclusively market and sell their property."
Exclusive Agency Agreement: "Greetings, I'm the exclusive agency agreement. I allow sellers to work with one agent while retaining the option to sell their property independently without paying a commission."
28
Explain each of these:
zoning amendment
special use permit
variance
non-conforming use
1. **Zoning Amendment**: "Hello, I'm a zoning amendment. I'm a change or modification to existing zoning laws and regulations. I can alter the permitted land uses, building requirements, or other zoning rules in a particular area. I help adapt zoning codes to evolving needs and priorities."
2. **Special Use Permit**: "Hi there, I'm a special use permit. I grant permission for a property owner to use their land in a way that's not typically allowed by the current zoning regulations. I'm often required when a proposed use is compatible with the surrounding area but requires a closer review to ensure it meets specific conditions."
3. **Variance**: "Greetings, I'm a variance. I provide relief from certain zoning restrictions when strict application of the zoning rules would cause undue hardship for a property owner. I allow for exceptions to the established regulations, like setbacks or height limits, under specific circumstances."
4. **Non-Conforming Use**: "Hey, I'm a non-conforming use. I refer to a property or use of a property that was legally established under previous zoning regulations but no longer complies with the current zoning code. I'm often allowed to continue as a 'grandfathered' use, but I may have restrictions on expansion or alteration."
29
What is a security deposit in the context of a leased property?
Payments for damages done by tenants that go beyond the normal "wear and tear" damages. Any amount not used will be refunded to the tenant at the termination of the lease within 30 days.
30
What is the clause in a listing agreement that protects the agent from a seller circumventing an agent’s commission by waiting until the agreement expires and then selling the property to a buyer that the agent introduced to the property?
Extender clause
31
The mechanism for municipalities to pay for the amenities and services such as schools, police, and fire services offered to its citizens?
Ad valorem taxes
32
The broker in charge can delegate the functions of money handling but the BIC cannot delegate the
responsibility
33
A North Carolina broker properly explains agency options to a prospective buyer, and the buyer chooses to enter into a written buyer agency agreement with the broker. The agreement does not authorize dual agency. The broker shows the buyer-client 15 houses listed by other companies before the client asks to see a property listed by the broker’s firm. Given these circumstances, what kind of authority to act as a dual agent must the broker obtain in order to proceed?
written authority to act as a dual agent from both the seller and the buyer before showing the in-house listed property.
34
Do non-provisional brokers need to be paid through their BIC?
Yes
35
An agent working under an exclusive buyer agency agreement is acting in what capacity in his relationship with the buyer?
Special agents
36
What is the clause in a listing agreement that protects the agent from a seller circumventing an agent’s commission by waiting until the agreement expires and then selling the property to a buyer that the agent introduced to the property?
Extender clause
37
Empire Realty is a large real estate firm that caters to seller clients. Which of the following acts would cause an Exclusive Right to Sell Listing Agreement with Empire Realty to terminate?
The death of the sole owner of the property would cause the listing agreement to terminate because it is a personal services contract.
38
Fiduciary duties to clients or customers?
Clients only
39
A seller is happy with all of terms of an offer except for the settlement date, which is scheduled on a day when the seller has a conflict. The seller signs the offer to purchase but scratches through the settlement date and replaces it with a date that is a week in the future. Can he do this?
Yes, and it constitutes as a counteroffer.
40
A provisional broker, Judy, leaves Firm A to join Firm B while she has a transaction in process at Firm A. Firm A appoints another agent to complete the transaction and agrees to compensate the provisional broker (Judy) a 50% commission at the closing. Which of the following most accurately describes how Judy will be compensated?
Judy may be compensated by Firm A despite the fact that she no longer is supervised by the Firm A BIC.
Provisional brokers can dually affiliate for a limited period of time to close out transactions at the firms that they leave.
Firm A must pay the commission to Firm B so that Firm B can pay Judy, as the Firm B BIC is the only one that can pay Judy for real estate activity.
Firm A would be forbidden to pay Judy as she can have only one broker in charge at a time and can only be compensated by the BIC at Firm B.
Judy may be compensated by Firm A despite the fact that she no longer is supervised by the Firm A BIC.
41
A North Carolina real estate license would be required in which of the following circumstances?
An employee of a public housing authority who assists low-income clients in the purchase or leasing of homes owned by the housing authority.
An attorney selling real property for a bank, for compensation while acting as a trustee in a foreclosure sale.
A seller selling real property that he/she is flipping for a profit.
A person with an MBA assisting his brother in selling his home in exchange for $500 in compensation for his business and marketing expertise.
A person with an MBA assisting his brother in selling his home in exchange for $500 in compensation for his business and marketing expertise.
42
An agent with ABC Realty takes a listing and places it in the multiple listing service. Which of the following statements is most accurate?
Any agent in the firm may show the property to their buyer client as an exclusive buyer agent.
All agents within the firm are considered subagents of the seller.
If an agent in the firm brings a buyer to the listing, that agent is automatically designated for the buyer.
No agents in the firm can show the property unless they have an agreement for designated agency.
All agents within the firm are considered subagents of the seller.
43
An agent with ABC Realty working under a verbal buyer agency agreement with his client finds a house listed by his firm. Because ABC is a small firm, most of its sellers have not consented to dual agency since it is a rare occurrence. The buyer agent would like to show the house, and potentially make an offer, but wants to comply with Commission rules in doing so. Which of the following is correct?
Verbal dual agency could apply in this circumstance if the buyer and seller have given the oral authority to practice dual agency.
Once the property goes under contract, the agent could complete the written buyer agency agreement with dual agency.
The buyer agent would not be able to show the buyer this home as there is a high-level conflict of interest.
All parties must agree to dual agency in writing before the buyer can be shown the home.
Verbal dual agency could apply in this circumstance if the buyer and seller have given the oral authority to practice dual agency.
44
You cannot show a buyer client a property listed with your firm until you get what in writing?
Dual agency agreement
45
A builder offered a $3,000 bonus to a buyer’s agent for a successful transaction, closing by the end of the month. This bonus was on top of the commission that the buyer agent had previously disclosed to the buyer. Which of these statements is true?
The buyer agent would be entitled to the bonus if the bonus was disclosed in a timely manner and reduced to writing no later than the offer to purchase.
This bonus would be a violation of RESPA and therefore, the buyer agent would not be able to legally accept it.
The buyer agent could accept this bonus but would not be allowed to share any of the bonus with her client.
Bonuses from third parties are not acceptable because they create an unacceptable conflict of interest.
The buyer agent would be entitled to the bonus if the bonus was disclosed in a timely manner and reduced to writing no later than the offer to purchase.
46
All are the following are true regarding drafting a contract, except what?
Parties to the contract may have addenda created by attorneys included in offers and contracts.
Parties to the contract may give agents the required permission to draft provisions into the offer and contract.
Parties to the contract may draft their own offers and contracts.
Parties to the contract may alter, delete, or change any provision in the standard forms.
Parties to the contract may give agents the required permission to draft provisions into the offer and contract.
47
What is constructive eviction?
The landlord's actions or failures to act make a rental property uninhabitable or significantly interfere with a tenant's ability to enjoy the property. In such cases, the tenant may have the right to terminate the lease without penalty or obligation to pay rent.
48
A provisional broker with ABC Realty has a buyer client who is interested in viewing a property listed by her broker in charge. Which of the following statements is accurate regarding this scenario?
The correct answer is that the provisional broker and the broker in charge could legally be dual agents of their respective clients, with their clients’ permission. Even though designated agency would not be an option because of the PB and BIC relationship (i.e. a PB cannot be designated for one party if his/her BIC is designated for the other party), the agents could still be dual agents and basically neutral to both parties.
49
The NC Real Estate Commission's main goal is to protect who?
Consumers/clients
50
Which of the following is a true statement?
A licensee would be subject to disciplinary action for violations of license law when selling their own property for sale by owner.
A licensee must disclose any change of name to the Commission within 60 days of such name change.
A licensee must report an arrest for a DUI within 60 days of the arrest.
A licensee whose license is inactive would be ineligible to receive any compensation for brokerage activities.
Licensees are subject to the powers of the Real Estate Commission when selling their own properties, even though they are not technically practicing brokerage activities.
51
Who owns the property in a trust?
the trustee
52
What is the default ownership for married buyers in North Carolina at the time of purchase?
tenancy by entirety
53
What two kinds of ownership do condo owners have?
Condo owners have fee simple absolute ownership of their unit and are tenants in common in the common areas.
54
Tenancy in Common
vs.
Joint Tenancy
vs.
Tenancy by the Entirety
Tenancy in Common for flexibility
Joint Tenancy for equal unity
Tenancy by the Entirety for married couples
55
A townhouse owner individually owns:
Townhouse owners own both the building and the land the townhouse sits on and have co-ownership of some common elements.
56
A property owner records their deed with the county in which the property is located. This is an example of:
Constructive notice
57
Which deed is used to convey property without any covenants or warranties against encumbrances?
Bargain and sale deed
58
What is escheat?
Escheat is the right of the state to seize a deceased person's estate if an individual dies without a will and has no surviving spouse, lineal descendants, or other known heirs.
59
A title search must be done by whom in North Carolina?
An attorney or a paralegal, not a title company.
60
If ownership cannot be traced through an unbroken chain because of a gap in the chain, it is necessary to establish ownership by a court action called what?
a quiet title suit
61
The block and lot survey system is also known as the:
The block and lot survey system is also known as the recorded plat method.
62
What is excise tax?
Tax on specified goods/services. "Excess" tax really, because the government is so greedy.
63
How to calculate excise tax?
- Round the total purchasing price by 500
- Divide that rounded number by 500
64
How do you round by 500?
- You divide the number by 500
- Multiply the whole number portion (round the whole number up or down according to the decimal part) of the decimal by 500
- There's your answer.
65
Explain the Connor Act:
The Connor Act is a state law that requires all conveyances of real property to be recorded to be effective against claims by third parties. North Carolina is a pure race state – whoever records first will win out on any disputes that may arise.
66
Which three types of deeds are considered deeds of conveyance in North Carolina?
general warranty, special warranty, and quitclaim
general warranty, bargain and sale, and quitclaim
general warranty, special warranty, and bargain and sale
special warranty, bargain and sale, and quitclaim
general warranty, special warranty, and quitclaim
67
A property is exclusively identified on the deed as 24029 Wisteria St., Bakersville, NC 12345. Evaluate the adequacy of this description.
That is not good enough; there needs to be a legal land description as well.
68
What is the purpose of the Interstate Land Sales Full Disclosure Act?
To protect consumers from fraud
69
Which of these is an example of a floating zone?
A floating zone is a zone that can only be activated and used with the approval of the city.
69
What does a master plan do for a community?
Ensure an organized use of the land.
69
Which of these is NOT something zoning regulates?
building code
lot size
density
height
Building code and zoning regulations are two separate but complementary parts of land-use regulations.
70
What is the primary purpose of an aesthetic zone?
To make the properties look uniform.
70
Zoning ordinances are laws passed at what level?
local
71
How are deed restrictions enforced?
LAWSUITS 👿
72
Where can asbestos typically be found in a building?
Asbestos can typically be found in a building in insulation.
73
Nick signs a listing agreement with Broker Bob. Over the phone, Linda asks Broker Alice to represent her as a buyer of a condo. What do we know to be true about these scenarios?
Both Nick and Linda's efforts to create an express agency fulfill North Carolina law regarding agency relationships.
Only Nick's written listing agreement fulfills North Carolina's requirement regarding agency relationships; Alice isn't allowed to create an agency agreement over the phone.
Only Linda's effort to create an express agency fulfills North Carolina law regarding agency relationships; Nick isn't allowed to create an agency agreement in writing.
Neither Nick nor Linda's efforts to create an express agency fulfill North Carolina law regarding agency relationships.
Nick has created an express agency with a seller and put it in writing as required by North Carolina law. Linda and Alice have expressed the intention to enter into an agency agreement, and since Linda is a buyer, they are allowed to have an oral agreement until Linda submits an offer to purchase a property. At that point, they'll have to put their agency agreement in writing.
74
A listing agent’s responsibility regarding the Residential Property and Owners Association Disclosure Statement includes which of the following?
to advise the seller of their rights and obligations regarding the RPOADS
to provide to buyers within five days of the first offer to purchase
to suggest that the seller answer “No Representation” on all questions to avoid potential liability
to assist the seller in the accurate completion of the form
to advise the seller of their rights and obligations regarding the RPOADS
75
Universal agency is usually granted via a(n):
power of attorney
76
What is the Sherman Antitrust Act?
prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author.
77
What does the CAN-SPAM Act do?
The "Controlling the Assault of Non-Solicited Pornography and Marketing" Act governs the use of commercial email advertising.
78
Which of the following scenarios would violate the Real Estate Commission’s rules regarding compensation of brokers in a firm?
a provisional broker leaves firm A to move to Firm B but is paid by his previous broker in charge for transactions that were in progress when he left Firm A
an agent, whose license went inactive on July 1 for failure to take continuing education, receiving a fee for a referral that he had given in May of the same year
a broker, with his broker in charge’s approval, receives a bonus from a new home builder paid directly to the broker at the closing table
a broker shares a bonus from a new home builder with the unlicensed buyer of the property
No, the buyer does not need a license to be compensated since he is a principal in the transaction. the Commission rule is to be paid by anyone other than the BIC or firm for a transaction involving the firm, so the broker receiving a bonus from a builder at the closing table would be in violation.
79
Sasha is an agent who is helping Ricardo buy a home. Sasha and Ricardo do not have a written agency agreement. Which of the following services, will Sasha be able to provide Ricardo?
Because Ricardo does not have a written agreement with Sasha and her firm, he will remain a customer. As a customer, he cannot expect Sasha to advocate for his best interest, keep his private information confidential, or offer advice. He can expect that Sasha will account for the finances involved in the transaction.
80
Jekyll (an agent) and Hyde (a mortgage lender) are best friends. Jekyll wants to help Hyde get business, so Jekyll offers a lower commission if clients agree to use Hyde for their mortgage. Jekyll is guilty of:
A tie-in agreement is a conditional agreement stipulating that a product or service desired by a party will be offered ONLY on the condition that the party also agree to purchase a second product or service.
81
Gabby and Daniel agree to replace their existing contract with a new one and to allow Kelsey to take Daniel's place in the new contract as a party to the agreement with Gabby. Kelsey now has all of Daniel's rights and obligations in the contract. This is an example of:
novation
82
What is novation in contract law?
Novation is a legal concept often used in contract law. It refers to the substitution of an old contract with a new one, where both parties to the original contract agree to release each other from their obligations under the original contract and enter into a new agreement. Novation effectively discharges the original contract and creates a new one with different terms or parties. It is commonly used in situations where one party to a contract wants to transfer their rights and obligations to another party, and all parties involved consent to this change.
83
What is accord and satisfaction in contract law?
Accord and satisfaction is a contract law concept that involves the settlement of a dispute or an existing obligation. An "accord" is an agreement between the parties to accept something different from what was originally agreed upon. "Satisfaction" is the performance of that new agreement. It occurs when one party offers something (the accord) to satisfy a claim, and the other party accepts it as full and final settlement of the original obligation. Once the accord is performed (satisfaction), the original obligation is considered fulfilled, and the dispute is resolved.
84
What is revocation in contract law?
Revocation is the act of cancelling or withdrawing a prior offer or agreement before it is accepted. In contract law, an offeror has the right to revoke their offer at any time before the offer is accepted. However, once an offer is accepted, a contract is formed, and the offeror can no longer revoke the offer. It's essential to communicate the revocation of an offer to the offeree to ensure clarity and to avoid any misunderstandings.
85
What is assignment in contract law?
Assignment is a legal concept that relates to the transfer of rights or interests in a contract or property from one party to another. When one party, known as the "assignor," transfers their rights or obligations under a contract to a third party, known as the "assignee," it is called an assignment. Assignments are common in various areas of law, including contracts, real estate, and intellectual property. An assignment allows for the transfer of rights but does not typically involve the delegation of obligations, which would be handled through a different legal concept called delegation.
86
From the moment a purchase agreement is signed, until closing on the property occurs, the contract is:
Correct! An executory contract, in contrast to an executed contract, is a contract that has not yet been fully performed. From the moment a purchase agreement is signed, until closing on the property occurs, the contract is executory.
87
The five basic elements of a valid contract are:
The five basic elements of a valid contract are legally competent parties, offer and acceptance, consideration, lawful objective, and reality of consent.
88
What law prevents Tommy from suing Lucy for damages after a certain time period has passed?
Statute of limitations
89
When Julie and Steve hammer out all their differences and fully agree to the terms and conditions that will make up their agreement, what have they achieved?
meeting of the minds
legally competent party status
lawful objective
accord and satisfaction
meeting of the minds
90
A broker promised his agents that he would give a bonus to anyone who got four or more listings this month. This is an example of what kind of contract?
Unilateral
91
What are double obligations?
Double obligations, also known as "double liability" or "double obligations of a debtor," refer to a situation in contract law where a debtor owes the same debt to two or more creditors simultaneously.
92
In a bilateral contract, what kind of obligations are created?
Reciprocal obligations
93
What does the parol evidence rule say about contracts?
The parol evidence rule says that oral evidence can be used to support a written contract but can NOT be used to contradict one — particularly a written contract that is clearly intended to be the final expression of the agreement.
94
In what type of contract can a party potentially be exempted due to death or incapacity from their contractual obligations?
Personal service contract
95
What type of damages are those which have been specifically stipulated by the contract to be awarded in the event of a breach of contract?
Liquidated damages
96
In regards to contracts lacking a legal element, which of the following is TRUE?
They do not always result in discharge.
They always result in discharge.
They are considered as having been created for an unlawful purpose.
They have always been that way from inception.
They do not always result in discharge
97
Andi, a BIC at a North Carolina real estate firm, is selling her own property. She drafts a contract for the sale. Is this legal? Why or why not?
Parties to a transaction can create contracts for that transaction, though it is frowned on by NCREC. Otherwise, only lawyers can draft contracts.
98
A buyer cancels their contract before 5 p.m. on the last day of the due diligence period. What will happen?
They will get their earnest money back. Due diligence fees are never refundable except in the case of a seller breach.
99
Broker Brady is selling his apartment. He chooses not to use a standard contract, but instead writes his own contract that fulfills all 19 legal requirements. The buyer, his buddy Teddy, is cool with his homebrew contract. Is this legal? Why or why not?
It's legal for a broker to draft a contract ONLY if they are one of the principals in a transaction.
100
Edan is a buyer's agent. Their client submitted a contract as a backup offer on a property. After a week, the buyer changed their mind and decided they didn't want to be backup anymore. There was another property they'd rather make an offer on. Edan apologized, explaining that once they agreed to be a backup offer and both parties signed the backup contract and addendum, they can't terminate the contract until the closing date of the primary contract. Is Edan right? Why or why not?
No, Edan is incorrect. The buyer who is the backup contract has the right to terminate the contract at any time until it becomes the primary contract (and then they presumably still have their due diligence period to terminate it if they want to).
101
Ari is a buyer's broker. He has shown his client a property that they're very interested in making an offer on. However, in the listing, it specifies that the listing broker is only offering 1.5% commission instead of Ari's typical 3%. He decides to make it a provision of the offer to purchase/sales contract that he get 3% instead of 1.5% (using language drafted by an attorney). His client is fine with this. Is this permissible? Why or why not?
Sales contracts (which, remember, are the same as offers) are prohibited by state law from including anything about broker compensation. Brokers are not a party to the contract, and that practice is not in the best interest of the parties.
102
According to the Buyer Possession Before Closing Agreement form, who pays for utilities while the buyer is occupying the property?
The Buyer Possession Before Closing Agreement says that the buyer must pay for the utilities while they occupy the property.
103
What are the three kinds of foreclosure?
Judicial, nonjudicial, and strict
104
The alternative to foreclosure that involves a temporary suspension of scheduled payments with the hopes that the borrower can use the time to make up the delinquency is known as:
Special forebearance
105
What might a GSE do with a loan after they buy it from a lender?
106
Promissory note vs security instrument
107
How to calculate amortization loans for interest payments and then principal
To calculate amortization, first multiply your principal balance by your interest rate. Next, divide that by 12 months to know your interest fee for your current month. Finally, subtract that interest fee from your total monthly payment. What remains is how much will go toward the principal for that month.
108
What is the TILA?
Trust In Lending Act
109
How do you solve what the monthly payments are when given the principal amount and the mortgage factor?
You multiply the principal amount but take away the last three zeroes, and then multiply it by the mortgage fact
110
The USDA's Single-Family Housing Programs focus on giving loans to:
Low/moderate income rural Americans
111
What are ARMs?
Adjustable rate mortgages
112
How does the Federal Reserve regulate the money supply?
The Federal Reserve regulates the money supply by lowering or raising interest rates, buying and selling securities, and controlling bank reserves.
113
What two loan forms were consolidated into what is now known as the Closing Disclosure?
114
A house is being sold and the property taxes were NOT prepaid. The settlement date is September 3rd. The total annual tax bill was $2,400. Using a 360-day year method, how much should the buyer be credited for the taxes?
115
What is an "affidavit as to debts and liens" or "lien waiver"?
An "affidavit as to debts and liens" or "lien waiver" is a sworn statement in which the seller assures the title company (and the buyer) that there are no liens, unpaid bills for repairs or improvements, or undisclosed defects in the title.
116
If an escrow account isn't set up for items like estimated taxes, insurance, and assessments, what should the borrower expect?
To pay those costs directly
117
Cost approach formula
cost - depreciation + land worth = ______
118
how to calculate for depreciation
age of property / useful lifespan
119
what does PGI stand for?
potential gross income
120
Investor Kamal wants a report on the potential usefulness or utility of a property he is considering buying. The individual charged with providing Kamal with this information came back with a report that addressed the way the property had been used in the past, its present use, and the possible ways it could be used in the future given its natural resources and applicable zoning laws and regulations. It made no mention, however, of the property's current or future value.
evaluation
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