Real Estate Course Chapter 14

Question 1

The 365-day method calculates the proration using the actual number of days in the proration period and is more accurate than the statutory month method. True or False?

Answer 1

True

Question 2

Prepaid rent is entered on the closing statement as a debit to the seller and as a credit to the buyer. True or False

Answer 2

True

Question 3

True or False - A transfer of title occurs at title closing, when the seller delivers title to the buyer in exchange for the purchase price.

Answer 3

True

Question 4

To prorate means …

Answer 4

to divide various charges and credits between buyer and seller

Question 5

The charges associated with the preparation of the deed are usually paid by the …

Answer 5

Seller (grantor)

Question 6

The charges associated with the preparation of the mortgage and note are usually paid by the …

Answer 6

Buyer (mortgagor)

Question 7

Items credited to the buyer include the earnest money deposit.

Answer 7

True

Question 8

How are Doc Stamps figured on the deed?

Answer 8

It is based on the full sale price. 70 cents on every $100. Remember to round up to the next increment (i.e. $30,323 * 100 = 303.23 or 304 x .70 = $212.80)

Question 9

What is the state tax rate for Doc Stamps on notes?

Answer 9

The tax rate on notes is $.35 per $100, or fraction thereof, on the face value of any NEW OR ASSUMED promissory note. Remember to round up (i.e 35,324 * 100 = 353.24 - or 354 x .35 = $106.20).

Question 10

When calculating rents owed in a closing, does the day of closing belong to the buyer?

Answer 10

YES. Also do not forget to add the 31st day if a month has one or if the month only has 28 days

Question 11

To change a decimal to a percentage, move the decimal two places to the ______ and add a percentage sign.

Answer 11

Right

Question 12

To change a percentage to a decimal, move the decimal two places to the ______ and get rid of the percentage sign.

Answer 12

Left

Question 13

How do you convert a fraction into a decimal?

Answer 13

Divide the denominator into the numerator. Example: 3/4 = 3 divided into 4 = 75%

Question 14

Profit is …

Answer 14

how much you make over and above your cost

Question 15

It is customary when transferring title to have all prorated items determined as of the …

Answer 15

midnight before the date of closing. In some areas in can be the day of close

Question 16

To prorate costs two methods are used. They are

Answer 16

The 30 day method and the 365 method.

Question 17

The 30 day method is also called

Answer 17

Statutory month method.

Question 18

How do you calculate with respect to the 30 day method?

Answer 18

1) determine the yearly cost of the item
2) divide by 12 to find the cost per month
3) divide by 30 to find the cost per day.
IMPORTANT: every month is assumed to have 30 days. A close of 7/23 would have 202 days (30 x 6 + 22). Remember you don’t count day of close.
5) multiply the total number of days X the cost per day.

Question 19

How do you calculate with respect to the 365 day method?

Answer 19

1) divide 365 into the yearly cost of the item to get the daily rate
2) multiply the number of days involved with the daily rate.

Question 20

What is the state tax rate for the State Intangible tax on new mortgages?

Answer 20

.002 ( two-tenths of one cent) PER DOLLAR of debt.

Question 21

How is the buyer’s binder deposit entered on the closing statement?

Answer 21

CREDIT TO BUYER ONLY

Question 22

Property taxes are paid in _______ using a _____ day year

Answer 22

arrears, 365

Question 23

Intangible tax is paid on _____ debt, whereas doc stamp tax on notes is paid on __________ notes

Answer 23

Intangible tax is paid on NEW debt, whereas doc stamp tax on notes is paid on NEW and ASSUMED mortgage notes.