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15 Cards in this Set
- Front
- Back
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The FHA program used for condominiums is Section
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FHA Section 234 is the loan program used to finance condominium purchases.
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Which term relates to a cooperative?
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The answer is a proprietary lease. A corporation owns the land and the building. Evidence of ownership is shares of stock. A proprietary lease allows the owners to occupy their units. The other terms relate to condominiums.
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A broker negotiates a contract for the purchase and sale of a condominium, and provides the required documents. Seven days later, the buyer's attorney states that he has reviewed the documents and finds them unsatisfactory. He requests a return of the $5,000 deposit. The buyer
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The answer is is not entitled to the deposit, because a three-day cancellation period exists for resale condominiums. Cancellation periods are three days for a resale condominium and 15 days for a new condominium unit.
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Which is TRUE about conversion from apartment rentals to condominiums?
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The answer is the greatest risks are the possible mass exodus of tenants and the elimination of rental income before sales commence. Careful planning and communication with the tenants may help to reduce this risk. |
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A man has purchased a condominium in Destin that gave him a money-back guarantee and a lock-in management agreement. He will receive a proportionate share of the profits for the entire project instead of receiving just the profits generated directly from his unit. While the profits are just less than break-even, he figures that the tax benefits from depreciation deductions will make it profitable. Which of these is TRUE?
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The answer is this investment will be treated as a security, and the owner will lose many of the tax benefits of real property ownership. Because of the lock-in management whereby he receives a proportionate share of the entire property's operation, it is not treated as a fee simple interest. |
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An investor has an income tax liability of $89,000. She rehabilitates a low-income apartment building at a cost of $10,000. If she receives a tax credit of 9% of the cost each year, how much must she pay in taxes? |
The answer is $88,100. The credit was $900 (multiply the $10,000 cost by 9%). Subtract the credit from the tax liability. |
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To receive a tax credit on low-income housing
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The answer is at least 20% of the units must be occupied by low-income individuals. The individuals must have incomes lower than 50% of the area's median income. |
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Which condominium disclosure document must be provided to prospective buyers?
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The answer is Condominium Association Question and Answer Sheet. The Condominium Association Question and Answer Sheet must be provided to prospective buyers. |
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The Florida Real Estate Time-Share Act gives buyers how many days to demand a refund of all deposits?
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The answer is 10. The language in the statute says: "You may cancel this contract without any penalty or obligation within 10 days from the date you sign this contract and until 10 days after you receive the public offering statement, whichever is later." |
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An investor purchased a new condominium for $600,000 that had 1,800 square feet of floor area. The appraised value of the other 99 apartments and the common areas was $62,000,000. There were 145,000 total square feet in the entire complex. The total budget of the condominium owner's association for this year is $300,000. What should the investor's bill for common area maintenance be?
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The answer is $3,724.14. Because Florida law requires that each unit's share of common elements maintenance must be related to the unit's total square footage or on an equal fractional basis, divide the square footage in Tim's unit by the total square footage in the entire complex, then multiply the result by the budget. 1,800 square feet ÷ 145,000 square feet = .01241; $300,000 budget × .01241 = $3,724.14. |
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In order for a cooperative owner to be able to deduct his or her share of interest and property taxes, what percent of the cooperative's rental income must come from tenant-owner rentals?
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The answer is 80%. Because of this rule, a project designed to allocate space for rental income other than that from the cooperative's units, such as street-level offices or retail shops, must observe the 20% limitation.
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Which is TRUE regarding the cooperative form of ownership?
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The answer is cooperatives can legally circumvent fair housing laws. Because of the corporate ownership and limiting the sale of its stock, the shareholders are not covered under fair housing laws. |
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The Fair Housing Act prohibits discrimination against families with children. All-adult communities are banned, EXCEPT for those
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The answer is where at least 80% of the units are occupied by at least one resident who is 55 years old. All-adult complexes for the elderly must be approved by the Department of Housing and Urban Development (HUD). |
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A triplex rents for $1,200 monthly for each apartment. It has 10% vacancy, operating expenses of 40% and the annual mortgage payment is $22,371. What is the annual cash flow? |
The answer is $957. The gross income is $43,200 ($1,200 × 3 × 12 months). Vacancy is $4,320 ($43,200 × .10). Effective gross income is $38,880 ($43,200 – $4,320). Operating expenses are $15,552 ($38,880 × .40). Net income is $23,328 ($38,880 – $15,552). Cash flow is $957 ($23,328 – $22,371). |
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Time-share sales associates must disclose which when listing a time-share unit?
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The answer is a seller has no guarantee that the time-share can be sold at any particular price or within any particular time period. This is a requirement for all sellers of time-share units.
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