Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
64 Cards in this Set
- Front
- Back
|
1) Which of the following best describes the difference between building codes and zoning regulations? |
building codes affect improvements on the property; zoning regulations control the use of real property |
|
|
2) An independent contractor relationship between a real estate brokerage firm and a licensee requires that the: |
brokerage and licensee must enter into a written agreement The IRS will consider a real estate licensee an independent contractor only if the brokerage firm and the licensee have a written contract saying that the licensee will not be treated as an employee for federal tax purposes. In addition, substantially all of the licensee's compensation must be based on commission rather than hours worked. |
|
|
3) An ad for a house includes only the following phrase about financing: "Assume the owner's original loan with only a $1,000 down payment!" What is wrong with this ad? |
it doesn't also include the loan's APR and other financial terms Under the TILA, if an ad contains a triggering term, such as the downpayment amount of percentage, then it must also disclose other info concerning the loan. This includes the loan's APR and the number, timing, and amount of the payments. |
|
|
4) Bob's prop has fair market value $190,000. County assesses 50% value and taxes 5.5%.b) $5,225.00 is annual prop tax |
$190,000 = fair market value $95,000 assessed value ($190,000 x 0.5) 5.5% tax rate x $95,000 =$5,225.00 |
|
|
5) Jesse Kim, and Diane own a home together as joint tenants. If Jesse dies, her property interest: |
will be automatically transferred (conveyed) to Kim and Diane Joint tenancy includes the right of survivorship, which means that upon the death of one joint tenant, title passes immediately to the remaining joint tenant(s). The property interest is not subject to probate; the transfer of title is automatic. |
|
|
6) A seller's agent knows that the seller intentionally failed to disclose on the property disclosure statement that the basement leaks when raining. The seller's agent must: |
inform buyer about misrepresentation An agent has the duty to disclose material facts to the parties in the transaction, even when the agent's principal would not prefer not to have the information disclosed. A leaking basement is a latent defect and certainly qualifies as a material fact. |
|
|
7) Which of the following loans would be subject to the Truth In Lending Act? |
loan to first-time home buyer TILA applies to consumer loans. Doesn't cover loans for business, commercial, or agricultural purposes, or loans to corporations or other organizations. |
|
|
8) Art sold his house with no mortgage. Closing expenses = $5,264, and he paid 7% commission of selling price. He received check for $372,316 at closing. What did the house sell for? |
$372,316 $372,316 + $5,264 closing costs =$377,580 before 7% commission 0.93x = $377,580 purchase price = $406,000 |
|
|
9) Frank gives Stella an option to buy his house. Stella, as the optionee, is obligated to: |
pay consideration for the option right Some consideration must pass from optionee to optionor. A mere statement of consideration is not adequate. Recording the option is advisable, but not required. |
|
|
0) A corn field with 900 ft depth, frontage of 484 ft is bisected by an access road, leaving two triangular lots. If the land sells for $2,000 per acre, how much is each lot worth?b) $10,000(see notecard) |
900 ft x 484 ft = 435,600 square feet 435,600 square feet / 43,560 square feet (1 acre) = 10 acres 10 acres / 2 lots = 5 acres 5 acres x $2,000 each =$10,000 |
|
|
11) Martha gave Hannah the right to purchase the vacant lot for $65,000. Hannah paid Martha $1,200 for this right. Hannah is the: |
optionee Martha gave the option to Hannah, so Martha is the optionor and Hannah is the optionee. |
|
|
12) Which is a list of duties owed to a principal by an agent: |
loyalty, confidentiality, reasonable care, accounting |
|
|
13) Ajax realty lists prop for a seller at a commission rate of 8%. The MLS service provides that a listing brokerage split commissions at a 50/50 rate. Baron Realty, a cooperating brokerage, finds a buyer for the property, at a price of $300,000. How much will the seller owe Ajax Realty at closing? |
$24,000 Under the terms of the listing agreement, the seller will pay the listing firm (Ajax) 8% of the sales price ($300,000 x 0.08 = $24,000). The seller is not a party to the MLS commission split agreement. It's up to AJAX to share half the money with Baron Realty in fulfillment of the commission split agreement; the seller owes Ajax the full commission amount, not half. |
|
|
14) A buyer enters into a buyer agency agreement with a real estate licensee to negotiate of a particular FSBO prop. The buyer then enters into a purchase and sale agreement, but the property he agreed to buy is subsequently condemned. Which of the following is true? |
the agency is terminating An agency is terminated by operation of law based on the extinction of the subject matter, such as the condemnation of the subject property. The buyer and agent can look for another property, but would need to form another agency relationship first. Practically speaking, that's not very difficult (especially in states where an agency relationship can be formed simply by beginning to provide brokerage services to someone). |
|
|
15) A right held by one or more personas to use and possess property to the exclusion of others is a/an: |
fee simple estate An easement allows the use of property, but is not a possessory right. An estate, in contrast, is an interest in land that is or may become possessory. (A fee simple estate is the most common form of estate). |
|
|
16) A new subdivision requires payment of HOA dies. If unpaid, what type of lien do they create? |
specific lien that encumbers the property Unpaid HOA dues create a specific lien, meaning that the lien attaches only to a particular piece of property. A lien is an encumbrance, so it is not terminated by the sale of the property and would affect the next buyer's title. |
|
|
17) A homeowner in a recently built subdivision plans to build an extra bedroom extending from the back of his house. Nobody in the subdivision has added on to their houses in a similar manner yet. What would the homeowner need to obtain before he could begin work on this project? |
building permit A property owner must obtain a building permit from the city or county before making significant alterations to an existing building. |
|
|
18) Barker is declared incompetent by court, and his daughters have been designated to handle his affairs. Can they sell his house? |
No, they haven't been designated by court to handle Barker's affairs An incompetent person's property may be sold, but the deed must be signed by a court-appointed guardian (power of attorney) or a duly appointed attorney in fact. The daughters don't meet the criteria. |
|
|
19) Peter plans to sell a number of different properties. He enters into an agreement with Agent Carla, in which she agrees to act as Peter's special agent. Under this agreement, how many properties can Carla list for Peter? |
a special agent may perform whatever legal acts have been authorized by the principal, so Carla can list as many properties as are stated in the agreement A special agent may perform whatever legal acts the principal has authorized the agent to perform. There is no limit on the number of listed properties that one agency agreement can cover. |
|
|
20) A buyer and seller enter into a PSA. The agreement provides that closing must take place by Date A. A clause states that a party's failure to be ready by a date specified in the contract will constitute a breach of the contract. What is the name of the clause? |
time is of the essence clause A contract clause that makes failure to meet a stated deadline a material breach of the contract is called a "time of the essence" clause. A time is of the essence clause does not have to be a stand-alone provision; it may be part of another provision. |
|
|
21) Interest on a loan for a home purchase is which type of interest? |
simple The interest paid on real estate loans is simple interest. |
|
|
22) Which of the following is a primary market lender? |
mortgage banking company A mortgage banker is a primary market lender, meaning that it originates loans directly to property buyers. Under the traditional distinction between a mortgage banker and a mortgage broker, a mortgage broker negotiates loans, bringing borrowers and lenders together for a fee, but (unlike a mortgage banker) is not a lender. |
|
|
23) A buyer is concerned with whether a property's soil is suitable for construction of a septic system would, as part of the inspection process, order a/an: |
percolation test |
|
|
24) Adjusted basis is initial basis: |
plus capital expenditures, less depreciation A taxpayer's adjusted basis in a property is the initial basis, plus capital expenditures, less allowable depreciation. |
|
|
25) Which of the following rental transactions would be covered by (not exempt from) the Fair Housing Act even if no real estate agent were involved? |
rental of a unit in a triplex, using no discriminatory advertising A residential rental transaction can be exempt from the Fair Housing Act only if the property is a single-family home and the owner has no more than three such homes, or if the property has no more than four units and the owner is residing on the property. Option C does not indicate that the owner is occupying one of the units in the triplex, so the Fair Housing Act would apply to the transaction. |
|
|
26) What is the most important consideration for a property manager who is deciding on appropriate rental rates? |
the rental rates for similar properties in the same market In a market analysis, the manager examines competing rental properties to help him to set appropriate rental rates. |
|
|
27) carpet square footage question, easy 15' x 18' room, how many yards of carpet to order? |
15' x 18' = 270 square feet 270 square feet / 9 (square feet in a yard) = 30 yards of carpet to order |
|
|
28) A deed that is not signed by the seller is still considered valid as long as it: |
d) is signed by an authorized attorney in fact The document used to assign legal rights to another person - for example, authorizing someone else to sign a contract and/or deed on one's behalf - is a power of attorney. The person who is appointed to act is known as an attorney in fact. |
|
|
29) A writ of a attachment, an easement in gross, and a special assessment all have what in common? |
b) they're encumbrances Writs of attachment and special assessments are financial encumbrances (liens), while an easement is a non-financial encumbrance (one that affects the use of the property), but all three are encumbrances. |
|
|
30) A potential buyer gives a seller an offer that doesn't meet the seller's demands in the listing. What has the buyer given? |
offer to purchase An offer simply must express a willingness to contract, and be certain in its terms. It does not need to match the seller's terms. |
|
|
31) Ed knows that his basement leaks, but doesn't disclose this to Sally, the buyer. Ed has also instructed his agent to keep the information confidential. After the sale closes, Sally finds out that the basement leaks, and she sues for fraud and misrepresentation. Sally can sue:c) both the listing agent and the seller |
both the listing agent and the seller In this example, both the seller and the listing agent acted to conceal a latent defect from a buyer, and they moth may be liable to the buyer for damages. |
|
|
32) An exclusive listing agreement is an example of a/an: |
express contract A listing agreement is an express contract (an express contract is one that is stated in words - written and spoken - rather than implied by actions, and a listing agreement is stated in words: it's a written agreement). Unlike an open listing, an exclusive listing agreement is a bilateral contract, not unilateral. |
|
|
33) Which of following clauses relates to a mortgage loan default and requires immediate payment of the debt? |
acceleration clause An acceleration clause allows the lender to accelerate the loan (demanding immediate payment of the entire amount owed) if the borrower fails to pay as agreed or defaults on any other aspect of the loan agreement. |
|
|
34) B purchases a small commercial property, and he finances it with a 65% loan. The lender charges 9.25% annual interest and three discount points. The discount points: |
increase the lender's upfront yield Discount points are a percentage of the principal amount of the loan, collected by the lender at the time the loan is originated, to give the lender an immediate yield over and above the interest. While the discount points decrease the nominal (promissory note) interest rate, they don't decrease the annual percentage rate; the APR takes the discount points into consideration. |
|
|
35) Which of the following statements regarding the Real Estate Settlement Procedures Act (RESPA) is true? |
the borrower is entitled to a good faith estimate of the settlement costs within three days of submitting an application Under RESPA, a lender is required to give a prospective borrower a good faith estimate of the settlement costs (closing costs) within 3 days after a written loan application is submitted, unless the application is turned down within that period. (Under the TRID rule, the good faith estimate must be presented on a loan estimate form.) Neither commercial transactions nor seller-financed transactions are covered by RESPA, and RESPA does not limit the interest rate lenders can charge. |
|
|
36) A developer lists 20 properties in a subdivision, with four different licensees. Each licensee gets her own model unit to work from. Which of the following is true? |
each model must display the Fair Housing logo HUD regulations require the display of a Fair Housing poster with the Equal Housing Opportunity logo in any place of business involves the selling or renting of dwellings. |
|
|
37) A property manager manages two large apartment buildings. They're older but well maintained properties with a 96% occupancy rate. Based on analysis of market rates, the property manager should: |
raise rents, if competitive market analysis confirms this Certainly the manager should raise of lower the rents if a comp market analysis confirms the move. Only answer C is definitely true in all cases-the CMA determines what level to set rents. (While answer A has some appeal, it's not the best answer: there might be reasons not to lower rents even to achieve higher occupancy. For example, perhaps a major employer is expanding soon and it would be a mistake to lock these units in at cheap prices.) |
|
|
38) Moe has an appurtenant easement over Ray's land. Ray's land is called: |
servient estate Moe is the dominant tenant and Moe's land is the dominant tenement (estate), benefited by the easement. Ray is the servient tenant and Ray's land is the servient tenement (estate), burdened by the easement. |
|
|
39) Which of the following would a landlord need to disclose to prospective tenants? |
presence of asbestos Landlords must disclose the presence of asbestos and other environmental hazards on the property. |
|
|
40) Which of the following is true regarding an oral agreement for the sale of real property? It is: |
unenforceable; it violates the statute of frauds An oral agreement for the sale of real property fails to fulfill the requirements of the statute of frauds. Such a contract is unenforceable. |
|
|
41) Which of the following would MOST LIKELY happen in a land contract? |
the vendor retains the title to the property until the final payment is made The vendor (seller) retains (not equitable) title to the property until the final payment is made. The vendee (buyer) receives possession and equitable title while making installment payments. The vendee is also usually responsible for property taxes, insurance, repairs, and upkeep during the contract term. |
|
|
42) A seller lists a 1.1 acre vacant residential lot, asking $10,000. His broker decides to offer the financing himself. The broker runs an ad saying, "A $3,000 down payment will get you a beautiful residential acreage." Is more credit information required? |
yes, because the down payment amount was given Under the advertising requirements of the TILA and Regulation Z (which apply to consumer loans secured by real property, including vacant land), if an ad contains a specific triggered term such as the down payment, then the annual percentage rate and the other terms of repayment must also be disclosed in the ad. |
|
|
43) Which of the following pieces of information may be an apartment property manager gather about applicants? |
employment history A property manager gathers information about rental applications' employment history to gauge their ability to pay rent. National origin is a protected class under the Fair Housing Act, and asking about it violates the act.Age alone isn't a protected class and many rental applications ask for birth date, but we think if a similar question is encountered on the state exam, the answer Employment history is more logical since it's more central to what landlords need to know. Social affiliation isn't protected by fair housing law directly directly, but it can implicate familial status and religion, which are protected classes. |
|
|
44) An owner sells a property, and the buyer is going to make a 25% down payment. The lender requires the buyer to pay discount points, which turn out to total $1,000. What was the purchase price? |
CHECK THIS FLASHCARD $62,500 Purchase price was $62,500. Find loan amount with discount points ($1,000/0.02) = $50,000 This question is simply two separate percentage problems. First, find the loan amount. Two discount points is 2% of the loan amount, so divide the value of the discount points by 2% to determine that this was a $50,000 loan ($1,000 / 0.02 = $50,000). The 20% down payment means this is an 80% loan. Now you can use the loan amount and the loan-to-value ratio to find the purchase price. To calculate the purchase price, divide the loan amount by 80% ($50,000 / 0.80 = $62,500). |
|
|
45) A person takes control takes control of an abandoned farmhouse, and begins to modernize it. She notifies the property's owner of her intention to do do and hears nothing back. Eventually she would be able to take title to this property through: |
adverse possession If a non-owner takes exclusive possession of a property without the owner's permission (the "hostile" requirement), in an open and notorious manner, and holds it for the required period of time, she can take title through adverse possession. Giving notice here helps satisfy the open and notorious element. |
|
|
46) Alex owns 35 acres of vacant land that he would like to deed to a local wildlife conservancy. However, a title search reveals that timber rights and an easement to use the property were sold to Giant Lumber Company in 1963. Since this lumber company went out of business in 1987, Alex should: |
seek advice from an attorney, since the easement may still be valid Even though the original easement holder no longer exists, a commercial easement in gross can be assigned. So the easement rights may have been transferred to another company, and it would be prudent to ask an attorney to investigate. |
|
|
47) An agent performing brokerage services owes all of the following duties, except: |
perform independent visual inspection of the property in question In WA, a licensee is under no obligation to perform an inspection of the property or investigate any other matters that she has not specifically agreed to investigate. |
|
|
48) A loan is set up so that the borrower's payments are the same size each month. Each payment is partly interest and partly principal, and the loan's balance at the end of the loan term will be zero. Which type of loan is this? |
fully amortized The regular payments on a fully amortized loan include both principal and interest will pay off the entire amount owed by the end of the loan term, so no balloon payment will be necessary. |
|
|
49) Which of the following actions by a real estate agent would be illegal? |
showing only houses located in mostly Latino neighborhoods to a Latino family If a real estate agent channels prospective buyers toward particular neighborhoods because of their national origin, that is steering, a violation of the federal Fair Housing Act. |
|
|
50) Which of the following is a requirement for a valid lease? |
lease expiration A lease generally needs an expiration date, either the date an estate for years will end, or the date a periodic estate will renew unless proper notice of termination has been given. |
|
|
51) A subdivision has deed restrictions that create a community nature trail from the rear ten feet of every owner's property. One owner decided that he wanted to use that part of his yard to have a storage shed instead. If the other owners want to keep him from doing that, they should: |
file an injunction in the appropriation court Homeowners who wish to enforce a deed restriction against another owner who plans to violate the restriction may do so by seeking an injunction, which is a legal order that prohibits a person from taking a particular action. |
|
|
52) A homeowner with a mortgage sells his home to a purchaser who agrees to assume the mortgage. The purchaser applies for and obtains the lender's approval, and the seller is released from liability for the mortgage. This is an example of: |
novation This is a novation, because the lender has approved the purchaser and released the seller from liability. The purchaser has entered into a new loan agreement with the lender that replaces the original agreement between the seller and the lender. |
|
|
53) Bart leases several acres from Stan so he can grow strawberries. However, when Bart arrives at the property to plant his strawberries, he realizes that Stain is already farming the acreage. Bart does not have to pay rent to Stan because of the: |
covenant of quiet enjoyment Every lease includes an implied covenant of quiet enjoyment. This is the promise that the tenant's possession will not be disturbed, either by the landlord or by a third part with a lawful claim to the property. A breach of the implied covenant of quiet enjoyment may be considered constructive eviction, releasing the tenant from the duty to pay rent as agreed. |
|
|
54) A buyer is planning to purchase a property where he can operate a small mechanic's shop out of his home. He eventually finds a property he likes, and tells the listing agent his plans. However, after closing he finds out that there are deed restrictions that prevent him from operating such a business from his home. Which of the following is true? |
Since the agent knew the buyer's intended use, the agent should have invested whether it was feasible or informed the buyer that he or his agent should investigate it The seller's agent does not owe a duty of loyalty to the buyer, so he is not required to investigate anything on the buyer's behalf. However, the duty of honesty and good faith would likely compel him to at least recommend to the buyer that he or his agent should investigate the matter further. The listing agent should know that zoning or deed restrictions would prevent most residential properties from being used for a mechanics shop; the issue is a material fact and not advising the buyer to look into it could lead to a lawsuit. |
|
|
55) Which of the following is the proper method for determining the gross income multiplier? |
divide sales price by gross income The gross income multiplier method involves dividing a comparable's sale price by its gross income to determine the multiplier. |
|
|
56) TempWorks leased space from Consolidated Properties for an 8-year term. The least did not include a provision regarding assignment of the least. Two years later, SuperTemps bought out TempWorks. TempWorks can: |
assign its leasehold estate to SuperTemps Absent a provision in the least to the contrary, a tenant may assign or sublease the leased space. |
|
|
57) Which of the following is a latent defect that would need to be disclosed? |
a crack in the basement wall that is covered by paneling A latent defect is a problem that would not be discovered by ordinary inspection. If a crack is obscured by paneling, it is not likely to be observed and therefore must be disclosed to prospective buyers. The other options are all plainly visible upon inspection and therefore are not latent defects. |
|
|
58) A landlord occasionally uses his master key to enter rental houses that he owns while residents are away. He avoids giving notice because he's looking for undisclosed pets, any damage or physical problems, and the like. This would be: |
not allowed under the implied covenant of quiet employment A landlord may enter the leased premises only with advance notice or the tenant's permission. Entry without notice or permission is a breach of the implied covenant of quiet enjoyment, the landlord's promise that the tenant's exclusive possession of the property will not be disturbed. |
|
|
59) The closing date is 8/16. The property's fair market value is $180,000. In this community, property is assessed at 50% of its market value, and taxes are applied at 55 mills per dollar of assessed value. Using a 365-day calendar year and assuming the buyer is responsible for the closing day, what would the buyer's prorated share of the annual property taxes be? |
$1,871.28 -find the annual property taxes-prorate them-beginning with tax assessment problem: assessed value is 50% of the market value ($180,000 x .5 = $90,000). Tax is calculated using mills, which are equivalent to 1/10th of a cent, so 55 mills equals 5.5 cents = $4,950.-Prorate the annual tax amount. First, find the per diem amount using a 365-day year ($4,950 / 365 = $13.56). Calculate the number of days for which the buyer is responsible (16 in August, including the closing date, 30 in September, 31 in October, 30 in November, 31 in December = 138 days). Multiply the number of days by the per diem rate to find the amount the buyer must pay at closing, to cover the remainder of the year's taxes ($13.56 x 138 = $1,871.28). |
|
|
60) A buyer is looking at a house in a neighborhood with newly installed sidewalks. When the buyer asks about taxes, the seller assures her that the home isn't subject to any special assessments. The buyer's agent should: |
advise the buyer that the property may be subject to special assessments and recommend that the buyer look into it As part of the fiduciary duty of loyalty, a buyer's agent is required to promote the buyer's interests, so it's appropriate for the buyer's agent to recommend that the buyer investigate the question of a special assessment instead of relying on the seller's assurances. (State law may specify that the agent is under no duty to investigate the matter himself, unless he specifically agreed to do so.) |
|
|
61) Which of the following pieces of information must a listing agent convey to a seller? |
a potential buyer, who has asked for the seller to take back a purchase money mortgage, has abused his credit in the past This information needs to be disclosed as a material fact, since it affects a party's ability to perform her contractual duties. |
|
|
62) Maria has a lease that begins no June 1 and ends on December 1 of that same year. Maria has a: |
term tenancy A term tenancy, also known as an estate for years, is a tenancy for any fixed period of time (even for less than one year). |
|
|
63) Bob builds a fence extending 20 feet onto the neighboring prop. He uses the land for 15 years without the knowledge of the neighboring owner, who lives in another city. When Bob wants to list his property for sale, including the extra 20-foot strip, which of the following is true? |
the land is his to sell, having passes through adverse possession Bob's possession of the land meets all of the criteria for adverse possession: he occupied the land, his use was open and notorious, it was exclusive, and for the required period of time. Hostile intent does not require confrontation. (Bob may need to file a quiet title action, though, to perfect the title before proceeding with the sale.) |
|
|
A deed restriction is a covenant that: |
restricts future owners of the property A deed restriction is a private agreement that limits uses of a property. It runs with the land, so it affects future owners of the property. While it potentially could last forever, there are a number of ways in which a deed restriction may be terminated. |
