Deck 10

Question 1

ALTA

Answer 1

(American Land Title Association) A type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy to include: unrecorded mechanic’s liens; unrecorded physical easements; facts a physical survey would show; water and mineral rights; and rights of parties in possession, such as tenants and buyers under unrecorded instruments.

Question 2

pledge

Answer 2

The depositing of personal property by a debtor with a creditor as security for a debt or engagement.

Question 3

plottage

Answer 3

A term used in appraising to designate the increased value of two or more contiguous lots when they are joined under single ownership and available for use as a larger single lot. Also called assemblage.

Question 4

shared appreciation mortgage

Answer 4

A loan having a fixed rate of interest set below the market rate for the term of the loan which also provides for contingent interest to be paid to the lender on a certain percentage of appreciation in the value of the property against which the loan is secured upon transfer or sale of the property or the repayment of the loan.

Question 5

appraiser

Answer 5

One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.

Question 6

land contract

Answer 6

A contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid. Also commonly called a conditional sales contract, installment sales contract or real property sales contract.

Question 7

trade-in

Answer 7

An increasingly popular method of guaranteeing an owner a minimum amount of cash on sale of owner’s present property to permit owner to purchase another. If the property is not sold within a specified time at the listed price, the broker agrees to arrange financing to personally purchase the property at an agreed upon discount.

Question 8

abatement of nuisance

Answer 8

Extinction or termination of a nuisance.

Question 9

security interest

Answer 9

A term designating the interest of the creditor in the property of the debtor in all types of credit transactions. It thus replaces such terms as the following chattel mortgage; pledge; trust receipt; chattel trust; equipment trust; conditional sale; inventory lien; etc., according to Uniform Commercial Code usage.

Question 10

constructive fraud

Answer 10

A breach of duty, as by a person in a fiduciary capacity, without an actual fraudulent intent, which gains an advantage to the person at fault by misleading another to the other’s prejudice. Any act of omission declared by law to be fraudulent, without respect to actual fraud.

Question 11

release clause

Answer 11

A stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien of the instrument as to a specifically described lot or area shall be removed from the blanket lien on the whole area involved.

Question 12

filtering

Answer 12

The process whereby higher-priced properties become available to lower income buyers.

Question 13

warranty deed

Answer 13

A deed used to convey real property which contains warranties of title and quiet possession, and the grantor thus agrees to defend the premises against the lawful claims of third persons. It is commonly used in many states but in others the grant deed has supplanted it due to the modern practice of securing title insurance policies which have reduced the importance of express and implied warranty in deeds.

Question 14

acceptance

Answer 14

The act of agreeing or consenting to the terms of an offer thereby establishing the “meeting of the minds” that is an essential element of a contract.

Question 15

annual percentage rate

Answer 15

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.

Question 16

liquidity

Answer 16

Holdings in or the ability to convert assets to cash or its equivalent. The ease with which a person is able to pay maturing obligations.

Question 17

California’s usury law limits the interest rate on non-exempt real estate loans to the greater of:

Answer 17

10% or the discount rate charged by the Federal Reserve Bank of San Francisco, plus 5% – Usury laws apply only to a loan of money or the forbearance of payment on a money loan. Thus, seller carryback notes are not covered by usury law

Question 18

What’s the limit that a Broker can place into a trust account to offset banking fees?

Answer 18

$200

Question 19

REVIEW: A life estate is limited to the life of its owner or the life or lives of one or more designated persons. All of the following are correct statements except:

Answer 19

there may be only one estate existing in a life estate at the same time and under the same circumstances.

Question 20

REVIEW: What is an agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date?

Answer 20

Credit

Promissory note was wrong for some reason

Question 21

REVIEW: There is a strict legal procedure of law for the attainment of a judgment. The legal procedure that is dependent on the rendering of a judgment is:

Answer 21

a Writ of Execution.

a Writ of Execution, is awarded after a judgment is obtained; therefore, it is dependent upon a judgment.

Question 22

REVIEW: The most essential element to create an enforceable broker-principal relationship is a:

Answer 22

written employment contract.

A written employment contract is the most essential element. The relationship may be unenforceable without it.

Question 23

Personal property can become real property when:

Answer 23

It is attached permanently to real estate

Question 24

REVIEW: The amount of principal that has not yet been repaid is called:

Answer 24

The remaining balance

Question 25

If a person who works for a non-profit organization wants to participate in an employer-sponsored investment plan that allows them to set aside tax-deferred income for retirement or emergency purposes, they would enroll in a:

Answer 25

403(b) plan

Question 26

REVIEW: The largest number of home loans are made by:

Answer 26

savings banks

Currently savings and loan associations and savings banks are the largest single resource for residential mortgage credit. NOT COMMERCIAL BANKS

Question 27

If a buyer of a property wishes to move into the newly purchased home before the close of escrow, the agent/broker should:

Answer 27

Obtain written consent from the owner

Question 28

When a veteran is looked at and proven to be eligible for a VA loan, the document that is given to them from the Department of Veteran’s Affairs is called:

Answer 28

Certificate of Eligibility

Question 29

A subdivider purchased 10 acres at $20,000 per acre. He paid $20,000 as a down payment. The balance was to be in the form of a straight note secured by a first trust deed. The said trust deed contained a release clause providing that, upon each payment of $20,000, one acre would be released free and clear. The subdivider subsequently paid $40,000 on the principal and received a release on two acres of land free and clear. By this transaction, the percentage of his equity in the encumbered property would do which of the following?

Answer 29

Increase

GOTTA ACTUALLY DO THE MATH: The equity is the difference between the market value of the encumbered acreage and the amount of the loan.|10 acres valued at $20,000 each – $18,000 loan = $2,000 equity per acre;|8 acres valued at $16,000 each – $14,000 loan = $2,000 equity per acre;|$2,000 equity = 1/9 = $18,000 loan;|$2,000 equity =1/7 = $14,000 loan;|His equity has increased from 1/9th to 1/7th of the encumbered property.

Question 30

Of the following, which would not be a blanket encumbrance in a subdivision?

Answer 30

Subdivision lots improvement assessment bond

An assessment bond is taken on each individual lot.

Question 31

blanket encumbrance

Answer 31

A blanket encumbrance is a lien or encumbrance that affects more than one lot in a subdivision.

Question 32

If land is acquired by accretion, who is the beneficiary of such acquisition?

Answer 32

the land owner

Question 33

REVIEW: In a buyer’s closing statement, the purchase price is:

Answer 33

buyer’s debit.

In a buyer’s closing statement: Credit the buyer with everything he has coming. Debit the buyer with everything he owes.

Question 34

REVIEW: In California, the uniform zoning symbol for an agricultural property would be:

Answer 34

None of these (it’s NOT “A”)

California as a state does not have a uniform zoning symbol. Most local governments do utilize zoning symbols, and agriculture would be typically zoned as “A” in a locality.

Question 35

REVIEW: Which of the following parties benefits the most from the recordation of a Request for Notice of Default?

Answer 35

Beneficiary of the second trust deed.

A request for a Notice of Default is for the beneficiary of the second trust deed. This way if the first trust deed is in default, the holder of the second trust deed must be notified so that he may protect himself.

Question 36

The beams that run horizontal and parallel to each other that support the floor and ceiling loads are called:

Answer 36

joists

Question 37

REVIEW: All of the following are classified as subdivisions and subject to regulation by the Real Estate Commissioner except:

Answer 37

a twenty-one unit apartment house.

Land divided into five or more parcels and condominiums, co-ops, stock co-ops, and community apartment projects of five or more are all subdivisions. An apartment house would not come under subdivision law unless each individual apartment was offered for sale in which case it would become a community apartment project.

Question 38

The main functions of a title company are to:

Answer 38

Examine and insure titles to real estate

Question 39

REVIEW: This is a type of ownership where an individual owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development:

Answer 39

Condominium

In a condominium, the individual(s) owns the airspace of his/her unit, but the buildings and common areas are owned jointly with the others in the development.

Question 40

What are major dates for California property taxes?

Answer 40

California’s fiscal year runs from July 1st to June 30th. Property taxes are generally collected in two equal installments. The first installment for July 1st through December 31st is due on November 1st and becomes late after December 10th. The second installment for January 1st through June 30th is due on February 1st and becomes late after April 10th.

Question 41

REVIEW: If evidence of active infestation is found, a structural pest control report is required to be provided:

Answer 41

Pest control reports are only required of U.S. Department of Veterans Affairs (VA) and some Federal Housing Administration (FHA) transactions, such as where active infestation is observed.

Question 42

REVIEW: The expression “company dollar” refers to:

Answer 42

money left over after a salesperson’s share of a commission has been paid.

Question 43

REVIEW: Agency relationships may NOT be solely created by:

Answer 43

voluntary offer by the agent.

Question 44

REVIEW: Interlineation

Answer 44

modifying printed wording in a form by inserting additional language between the printed lines. This is improper conduct when it is performed after the principal has signed the agreement.

Question 45

REVIEW: megalopolis

Answer 45

A metropolitan area where the cities within it have grown together

Question 46

REVIEW: During the escrow process, if an unresolved dispute should arise between the seller and the buyer preventing the close of escrow, the escrow holder may legally:

Answer 46

file an interpleader action in court.

An interpleader action is a legal proceeding whereby an innocent third party (stakeholder - such as an escrow agent or broker) can deposit with the court the property or money that he or she holds, and which is subject to adverse claims such as when the buyer and seller are in dispute over the purchase contract.

Question 47

REVIEW: The authority given by law for a creditor to obtain a charge or a debt from a debtor is, in the broadest sense of the term, a:

Answer 47

judgment

The authority given by law or by court action is a judgment. An attachment, when allowed, is received prior to the judgment. When a judgment is recorded, it becomes a lien.

Question 48

Zoning regulations establish the permitted uses of land as well as:

Answer 48

building heights, setbacks, and density.

Question 49

Nathan agreed to list his property for sale with Broker Chan. In the listing agreement, Nathan specified Broker Chan is not authorized to accept a deposit towards the purchase price from the buyer. What happens if Broker Chan produces a buyer?

Answer 49

If he accepts a deposit, he holds it as an agent of the buyer until the offer is accepted by the seller.

Question 50

The relationship between a vendor and vendee under a land sales contract is most similar to the relationship between a(n):

Answer 50

seller and buyer.

In a land sales contract, the seller acts as lender and retains title to the property until paid in full. The relationship most similar to this would be that of the borrower and lender (i.e., mortgagor and mortgagee).

Question 51

Insulation values are rated as “R”. What does this represent?

Answer 51

Resistance to heat flow.

Question 52

REVIEW: A violation of a condition in a homeowners’ association’s (HOA’s) conditions, covenants and restrictions (CC&Rs) is:

Answer 52

more severe than the violation of a covenant.

Question 53

Which of the following is false regarding the cost method of appraisal?

Answer 53

It produces the lowest value results.

Of the three appraisal approaches to determine a property’s value, the cost approach will generally produce the highest value and the income approach will generally produce the lowest. The reason for this is that while the cost approach shows the actual expense to replace the property, the income approach demonstrates the value based on the income it generates which is always less. Note that the alternative answer selections may be useful to remember for other questions.

Question 54

A property owner lost their job. The owner’s loan payments were made for them since they
had a(n):

Answer 54

Under a California Housing Financing Agency (CalHFA) loan, the CalHFA will make loan payments for a borrower during a period of unemployment.

Question 55

Successful marketing materials are generally held to include the following four critical elements:

Answer 55

AIDA
attention, interest, desire, and action.

Question 56

To make a formal declaration that a statement is true without giving an oath is a(n):

Answer 56

affirmation

Question 57

A seller enters into an exclusive right-to-sell listing with an agent but does not receive a copy of the signed agreement. The seller, believing this relieves them of any obligations, personally sells the property while the listing is in effect. What is the outcome?

Answer 57

The listing is valid and enforceable, but the broker is liable to be disciplined.

Question 58

In a §1031 real estate exchange, “boot” does not refers to:

Answer 58

like-kind consideration – Boot refers to any consideration in a §1031 exchange of an unlike kind. Once again, the answer choices offer the reader important information regarding the subject of this and related questions.